Liner contract soar to new records as shippers crave reliability
CONTRACT rates in container shipping have soared to record levels on the China Containerised Freight Index (CCFI) that ended last week with 2,074 points, reported Singapore's Splash 247
11 May 2021 - 19:00
The combined CCFI peaked at 2,072 points on February 19 following Chinese New Year. The index is defined as being equal to 1,000 at the beginning of 1998.
The previous record was set in May 2012 at an index level of 1,335. Aside from that, the CCFI has only been above index 1,250 on one other occasion - the first week of October 2004.
Since the new record of 2,072 was set in February, the CCFI slowly declined to 1,853 on April 16 whereafter the ripples from Suez Canal blockage started having an impact.
Vespucci Maritime consultancy founder Lars Jensen said that typically contract rates lag spot rates by around three weeks. Spot rates have been in renewed record territory for much of the last month.
With liner reliability falling, and spot shipments increasingly hard to confirm, there has been an increase in contracting this year.
Data from New York Shipping Exchange (NYSHEX) shows that the concept of enforceable contracts has seen a significant increase in the Pacific headhaul trade in 2021.
Last year's first quarter saw only one per cent of the volume in enforceable contracts in the Pacific, and that was for eastbound headhaul - most contracted cargo was backhaul.
This year's first quarter has seen 39 per cent of the volume contracted on enforceable contracts being Pacific eastbound headhaul. As overall contracted volumes have increased as well, this shift is a direct reflection of an uptake on the headhaul and not a down turn on the backhaul.
Said Mr Jensen: 'This is reflective of a market where the outlook for 2021 seen from a shipper perspective has clearly shifted to supply chain resilience as there is a genuine concern that there might be periods where not everyone will be able to secure space.'
Across the board, records are tumbling in the container space. Charter rates, for instance, continue to jump - 4,400-TEU ships now able to command US$48,000 a day.
'Not only are owners invariably achieving rates higher than last-done, they are also achieving longer periods,' the creators of Hamburg's ConTex index noted.
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