Drewry expects freight rates will increase ahead of the holiday season
PROVIDED container shipping lines 'refrain from returning too much capacity, there is a reasonable hope for higher freight rates' in the run up to Black Friday on November 29 and Christmas, according to Drewry Shipping Consultants
PROVIDED container shipping lines 'refrain from returning too much capacity, there is a reasonable hope for higher freight rates' in the run up to Black Friday on November 29 and Christmas, according to Drewry Shipping Consultants.
Drewry's senior manager for container research Simon Heaney said Christmas merchandise will continue to arrive in the US in coming weeks and that transpacific volumes could also benefit from shipments being made in advance of factories closing down for China's Lunar New Year celebrations, which start on January 25, earlier next year compared with February 5 2019, reported American Shipper.
The London-based maritime research consultancy's latest Container Insight Weekly newsletter said: 'The transpacific has thus far managed to avoid significant contraction thanks to a combination of factors, including a weakening of the Chinese currency, willingness from some Chinese exporters and American importers to absorb some of the additional costs arising from the new tariffs and some trade substitution within Asia.
'Countries such as Vietnam, Taiwan, Thailand and Malaysia have all stepped up trade with the US to counter lost Chinese exports.
'Ultimately, what gives us confidence in the longer-term prospects for the transpacific is the underlying strength of the US economy that hasn't been derailed by the Washington and Beijing shenanigans and has continued to create jobs and raise incomes throughout.'
Drewry's World Container Index showed that on October 24, spot container rates from Shanghai to Los Angeles were down 47 per cent and rates from Shanghai to New York had fallen by 28 per cent year on year.
Between January and August, loaded traffic volumes from Asia to the US west coast, Canada and Mexico decreased by three per cent, but a six per cent rise in the smaller trade from Asia to the east coast of North America meant container imports from Asia were unchanged from 2018.
Drewry said that trend continued in September, with US-only data from PIERS showing shipments from Asia to the US west coast declining by 5.8 per cent, however, shipments to the east and Gulf coasts were up 6.9 per cent.
Drewry forecasts that in 2020 eastbound transpacific volumes will expand by 3.2 per cent, compared with 2.3 per cent growth from Asia to North Europe and expects Asia-Mediterranean trade volumes to rise by 3.2 per cent.
Drewry's newsletter noted that ocean liners have attempted to lift freight rates by withdrawing capacity, with September's headhaul slots reduced by two per cent from the same month last year.
'The impact of numerous blanked sailings was to drive up average load factors above 90 per cent from June onwards, but the market didn't bite at these artificial supply manoeuvres as spot freight rates have stubbornly stuck around the US$1,500/40ft container level since February,' Drewry said.