We’re four months into 2017 and its the same old song: more megas entering the market, new alliances redefining the market and more empty boxes than all the available cargo in the world cannot fill. Spot market rates are at an all-time low and freight rates can’t keep steady above water. Norway-based maritime market intelligence platform Xeneta reviewed the shipping industry’s current situation and the possibilities for a brighter –or less gloomy- future.
According to Xeneta’s analysis, “carriers have been able to force through large, high rate increases across the board. Shippers and also forwarders have huge challenges now in order to secure space, or get the outbound from Europe. The rates are increasing both on the import side, on the export side to and from quite a lot of the different continent combinations.There's a lot of challenges in terms of some of the companies when it comes to finalizing the tenders. What is a good rate level? Are we able then, to secure long term rates, and so forth? Also, obviously, to set the right expectations internally.”
Follow the action
Recovery is key for the survival of the container shipping industry. Experts at Xeneta have been analyzing the industry’s situation for a while, and “the biggest danger of a slumping market is the recovery. The road to recovery may be long and difficult, as it entails a change in the way business is traditionally done or, at least, the ability to detect where change is occuring. Asia-Europe-Asia is a seller's market. That’s where the ‘action’ is right now, with rates skyrocketing.
For instance, the Far East to Northern Europe main corridor strated out in 1st of January with a rate level around US$2,000. Now, the spot market rates have slowly moved down to around US$1,780. Yes, there is volatility, but far less in this market than other trade routes where rate levels hover around US$1,400 as the average for 40 foot container for longer term contracts down to $1,200.
Of course, there’s a difference between the spot market and the long term market in terms of rates, but the trend is the same: rates stay or drop, but hardly ever go up. “Who knows how long this is going to stick, but obviously it's a huge challenge for a lot of forwarding companies and also shippers to get the space they need to ship the products they need to their customers in Asia,” say Xeneta’s experts. Analysts at the blog also comment that “It's also going to be very interesting to now see what is going to happen, even if the carriers have been able across the board to push up rates on more or less old corridors, how will this develop now through the rest of 2017, since there still is an underlying factor of an oversupply in the fleet.”
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