DREWRY Maritime Advisors expects East-West container rates to fall again in 2016 and for pricing volatility to remain a feature. Much will depend on the stability of oil prices, while the impact of the widened Panama Canal and shipping alliance restructuring could also trigger sudden rate fluctuations.
Spot market container freight rate volatility intensified in 2015, with the rate erosion and volatility linked to declining oil prices and the ever widening gaps between supply and demand, according to Drewry's latest Container Insight Weekly report.
Drewry found that factors such as the greater use of missed sailings and demand peaks saw monthly load factors, and subsequently rates, move up and down more frequently, reported Port Technology International from London.
Carriers also have themselves to blame for the race to bottom by readily accepting cargoes at sub-economic levels, while the US west coast labour-related slowdown and the impending widening of the Panama Canal also played a part.
The World Container Index - a joint venture between Drewry and Cleartrade Exchange - reported that its weighted-average index of 11 East-West lanes rose by 67 per cent in the first week of January, 2016.
That gain, equivalent to US$1,225 per TEU, was sustained in the second week but thereafter two successive declines wiped out 60 per cent of the initial hike.
Drewry's analysis of the World Container Index data for the headhaul East-West lanes has found that freight rate variance has been widening since 2012, and dramatically so in 2015.
At the same time, the analysis reveals that carriers' attempts to increase rates through general rate increases (GRIs) are increasingly ineffective.
Average spot rates fell in five of six sample lanes in 2015 with the Asia to Europe and the Mediterranean lanes the hardest hit, having lost about half their value. The spread between the highest and lowest weekly rates was over $1,000 in three of the sample lanes, with four lanes seeing that spread widen by over $300 from 2014.
Shanghai to New York, by far, had both the highest spread in 2015 and the biggest increase over 2014, as the trade went from rate highs of $2,500 per TEU in early 2015 when cargo was being diverted from the US west coast ports to later-year lows of just $750 per TEU.
WORLD SHIPPING
09 February 2016 - 22:25
East-West box shipping rates to decline in 2016 & volatility to remain: Drewry
DREWRY Maritime Advisors expects East-West container rates to fall again in 2016 and for pricing volatility to remain a feature. Much will depend on the stability of oil prices, while the impact of the widened Panama Canal and shipping alliance restructuring could also trigger sudden rate fluctuations.
WORLD SHIPPING
09 February 2016 - 22:25
East-West box shipping rates to decline in 2016 & volatility to remain: Drewry
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