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Sharp reduction in freight tariffs: Turkish exporters enter a challenging period

Container freight rates from China to Europe are falling sharply.

Sharp reduction in freight tariffs: Turkish exporters enter a challenging period

Freight tariffs have been on the decline due to the early peak season and volumes being brought forward. The Drewry World Container Index (WCI) reached $3,216 this week. If the 4% decline continues, prices may cross the $2,706 threshold in May. Capacity remains high on Asia-Northern Europe, US West Coast and Latin America routes; carriers have no capacity adjustments for the winter season.

Tariffs for cargoes leaving Chinese ports are expected to fall further in the next two months amid a surplus of container ships. China's slowing exports and domestic demand make competition tougher for Turkish exporters. The cost of transporting a 20-foot container from Shanghai to Europe fell to $3,000 from $5,000 in July.

China's slowing exports may also weaken demand. “The fourth quarter is usually a low season for shipping,” Cai Huixing, president of the Shanghai Shipowners Association, said at a press conference on Thursday. “We expect freight tariffs to fall. Tariffs may rise again in 2025 as the armadores take steps to address the overcapacity issue.”

China is impacting global competition with aggressive pricing policies and CIF deliveries to Rotterdam, undercutting costs in Türkiye. Unless China's economy grows, Turkish industrialists may face difficult times.

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