Reklam
Reklam
Reklam
Reklam
Reklam
Reklam
Reklam

Outlook 2021: Asia-Europe shippers to face sharp rise in contract rates

ASIA-EUROPE shippers reaching the end of their annual contracts should prepare their budgets for steep and unavoidable rate increases in 2021, according to Xeneta, a freight rate benchmarking and market analytics platform

21 January 2021 - 19:00
ASIA-EUROPE shippers reaching the end of their annual contracts should prepare their budgets for steep and unavoidable rate increases in 2021, according to Xeneta, a freight rate benchmarking and market analytics platform.

With the surging spot market unlikely to weaken before Chinese New Year in mid-February,rates from China to North Europe have risen steadily since hitting a low point in the second quarter.



However, by the end of November, the rate was more than double the average contract rates from China to North Europe, according to Xeneta.



This divergence will put strong upward pressure on contract price levels, said Danny Smolders, managing director of global sales at Hapag-Lloyd.



'It is too early to put a percentage on the contract rate increases on Asia-Europe for 2021, but looking at the low long-term rates we have so far, I can say that the contract rates will be substantially higher,' Mr Smolders said.



Alan Murphy, CEO Sea-Intelligence Maritime Analysis, noted the high correlation between spot and long-term rates in ocean freight. 'The underlying hypothesis is that freight rate changes tend to happen first in the more volatile spot markets and subsequently influence the contract rate levels with a time delay as new contracts are negotiated with an eye to developments in the spot market,' he said.



By mid-December, the soaring spot market saw China-North Europe rates rising to levels more than three times the level at the same time last year and increasing by 183 per cent on China-Med routes year over year.



According to the Shanghai Containerised Freight Index (SCFI), Asia-North Europe rates on December 11 reached US$2,948 per TEU, and Asia-Mediterranean rates reached $3,073 per TEU.



To put that in context, the average SCFI rate from China to North Europe in 2019 was $764 per TEU, and from January through November 2020, the average spot price was $979 per TEU.



The rates paid by shippers will be going up, said Peter Sand, chief shipping analyst for BIMCO, who outlined the shipper predicament in a late November market update.



'If the alternative to signing a new, higher priced contract deal is the spot market, which may be two or three times that price, you need to get that higher contract rate,' Mr Sand said. 'Remaining in the spot market will be so much more expensive.'



Rising rates have been accompanied by deteriorating service levels, with Sea-Intelligence reporting that global ocean carrier schedule reliability fell to a record low in October of 52.4 per cent. On-time performance on the Asia-North Europe trade fell by 15 percentage points month over month to 54.4 per cent, while Asia-Mediterranean reliability declined 16.3 percentage points sequentially to 52.2 per cent.


SeaNews Turkey
This news 959 hits received.

COMMENTS

  • 0 Comment