HOPES are rising that stronger retail sales in the US than expected and the Chinese New Year in January will help drive up freight rates on the transpacific trade early next year.
HOPES are rising that stronger retail sales in the US than expected and the Chinese New Year in January will help drive up freight rates on the transpacific trade early next year. The brighter forecast comes after spot rates hit their lowest level in 23 months in the first week in December. But several carriers have announced plans for rate increases at the start of January as lines attempt to take advantage of cargo spike before factories in Asia close for Chinese New Year celebrations. Rahul Kapoor, a Singapore-based shipping analyst with broker RS Platou, told Newark's Journal of Commerce that the forecast for a rate rebound on the transpacific trades was much higher than on Asia-Europe routes. "We see a potential for inventory restocking there, albeit at a more gradual pace than in 2010," he was quoted as saying. "We expect rates to recover on expected improvement in demand ahead of the Lunar New Year, but capacity adjustments would be the key to the extent of recovery." According to Thomas Knudsen, Maersk Line CEO in the Asia-Pacific, transpacific loadings have been busy in recent weeks as carriers withdrew capacity. He expects demand to grow further in anticipation of the factory shutdowns for the Chinese Lunar New Year holiday. "It's an early Chinese New Year, plus there is also Christmas and New Year so we expect to be busy in the coming weeks on both Asia-Europe and the transpac," said Mr Knudsen. Said Mr Kapoor: "With import growth turning negative in the past quarter, we believe that retailers are drawing down inventories." If demand holds, carriers will have "a perfect platform" to implement announced surcharges and gain a better bargaining position for annual contracts, the report added.
