GLOBAL container freight rates have stabilised recently as the short term revival in east-west pricing has faded in the face of weak headhaul demand and rising fleet capacity, says London shipping consultant Drewry in its Global Freight Rate Index.
The Drewry index, a weighted average across all main trades excluding intra-Asia, consolidated the gains of December with a two per cent increase in January to US$2,513 per TEU. This brought the index up to its highest level since August 2012 and just four per cent off last year's peak month of June.
The Global Freight Rate Index is published in Drewry's Container Freight Rate Insight, along with freight rates covering over 600 different trade routes and several other aggregated indexes.
Trades contributing to the index's rise were the transpacific eastbound; Middle East exports to both Europe and North America and imports from Asia as well as South American, African and Oceania northbound exports.
Routes experiencing falling rates in January included the westbound transpacific backhaul trade, South Asian exports to Europe and imports from Asia, eastbound transatlantic and Asian imports to South America and Africa.
Rates on the latter had been rising strongly through 2012, but slipped in January. For instance, Drewry's benchmark rate from South China (Shenzhen-Yantian) to Brazil (Santos) had reached its highest level in two and a half years by December 2012 but slipped three per cent in January to $4,380 per TEU.
A number of other trades remained stable, including both legs of the Asia-Europe trade; the transatlantic westbound; Asian imports into Oceania and the regional trade of intra-Europe.
Pricing on the intra-Asia trade (not included in Drewry's Global Freight Rate Index) stabilised following two successive months of declines. Drewry's Intra-Asia Freight Rate Index edged up just 0.5 per cent in January.
Despite another year of excess capacity growth, Drewry expects global freight rates to rise through 2013. This is because the majority of new ship deployments are destined for already overburdened east-west trades where pricing is expected to come under pressure.
While carriers also remain challenged by capacity growth on north-south trades, the stronger demand growth will help buoy rates, so lifting average global container freight pricing.
Against this background, Drewry is forecasting a modest increase of four per cent in average global freight rates in 2013, with variations between different routes. Freight rate volatility will continue as carriers grapple with increasing overcapacity and resort to their preferred short-term measures of sailing suspensions and frequent general rate increases.
Importers and exporters should prepare themselves for a choppy ride through 2013, Drewry said.