Ultra-low Asia-Europe rates will soon be over after Hanjin's demise: Xeneta
OSLO-based Xeneta, a global benchmarking and market intelligence platform for containerised ocean freight, says its global community of shippers is reeling from the aftershocks of Hanjin Shipping's collapse.
Xeneta crowd-sources shipping rate data from 600 major international businesses, many of whom have now been hit by stranded inventory, rising prices and claims of under-capacity from the remaining shipping lines.
Said Xeneta CEO Patrik Berglund: "For an industry that has struggled with collapsing rates, severe overcapacity (8.1 per cent at the beginning of 2016) and devastated profit margins - with even Maersk down 90 per cent year on year for Q2 - this marks an opportunity to finally regain the upper hand at the negotiating table."
Mr Berglund said Hanjin's failure resulted in an immediate capacity reduction of up to eight per cent in transpacific and Asia-Europe routes.
He said that for many of the firm's community it's the stranded inventory that's the number one priority, with an estimated US$14.5 billion of goods marooned on vessels worldwide, belonging to 8,300 different companies.
That's the immediate concern, but, as he explained, the long-term is also causing consternation, he said.
"Short term rates were already rising on the main Far East Asian to north European port route, the world's most important trade channel, since hitting lows in March.
Then the market average price for a 40-foot container stood at US$552, in late August it climbed to $1,172 and now its $1,834. Transpacific routes have climbed from $839 in March to $1,887.
"As the year comes to an end the tendering/bidding season starts for many European shippers. This will be a wakeup call for the large-volume shippers who have maybe become accustomed to basking in long-term contracts at low rates. In a changed market the carriers won't be as accommodating. Last term's prices will suddenly be a distant memory."
OSLO-based Xeneta, a global benchmarking and market intelligence platform for containerised ocean freight, says its global community of shippers is reeling from the aftershocks of Hanjin Shipping's collapse.
Xeneta crowd-sources shipping rate data from 600 major international businesses, many of whom have now been hit by stranded inventory, rising prices and claims of under-capacity from the remaining shipping lines.
Said Xeneta CEO Patrik Berglund: "For an industry that has struggled with collapsing rates, severe overcapacity (8.1 per cent at the beginning of 2016) and devastated profit margins - with even Maersk down 90 per cent year on year for Q2 - this marks an opportunity to finally regain the upper hand at the negotiating table."
Mr Berglund said Hanjin's failure resulted in an immediate capacity reduction of up to eight per cent in transpacific and Asia-Europe routes.
He said that for many of the firm's community it's the stranded inventory that's the number one priority, with an estimated US$14.5 billion of goods marooned on vessels worldwide, belonging to 8,300 different companies.
That's the immediate concern, but, as he explained, the long-term is also causing consternation, he said.
"Short term rates were already rising on the main Far East Asian to north European port route, the world's most important trade channel, since hitting lows in March.
Then the market average price for a 40-foot container stood at US$552, in late August it climbed to $1,172 and now its $1,834. Transpacific routes have climbed from $839 in March to $1,887.
"As the year comes to an end the tendering/bidding season starts for many European shippers. This will be a wakeup call for the large-volume shippers who have maybe become accustomed to basking in long-term contracts at low rates. In a changed market the carriers won't be as accommodating. Last term's prices will suddenly be a distant memory."