Rate increases disguise weakness of box shipping sector: Xeneta
THE container shipping sector remains mired in troubled waters, in spite of a recent rate increase on the main east-west trades.
This positive swing belies an industry still suffering from weak demand, according to Xeneta, a global benchmarking and market intelligence platform for containerised ocean freight.
"The containership sector has been in a state of flux for some time," said Xeneta CEO Patrik Berglund, "and, unfortunately for its key players, the prospect of stability remains a distant speck on the horizon.
"Short term rates have been rising on the main Far East Asian to north European port route, the world's most important trade channel, since hitting lows in March. At that point the market average price for a 40-foot container stood at US$552, now it's climbed to $1,172.
"On the face of it, this is a strong development for containership companies, but the industry has been undermined by weak fundamentals for so long that it's not quite that simple," said Mr Berglund.
He points to structural problems within the segment, with 2016 beginning with severe overcapacity. In the last calendar year 208 newbuilds were introduced to a market already awash with new megaships, leading to an 8.1 per cent oversupply of TEU.
"There's simply been too much space and not enough demand," Mr Berglund said. "European economies remain fragile, US inventory levels are high and Chinese imports have receded as a result."
THE container shipping sector remains mired in troubled waters, in spite of a recent rate increase on the main east-west trades.
This positive swing belies an industry still suffering from weak demand, according to Xeneta, a global benchmarking and market intelligence platform for containerised ocean freight.
"The containership sector has been in a state of flux for some time," said Xeneta CEO Patrik Berglund, "and, unfortunately for its key players, the prospect of stability remains a distant speck on the horizon.
"Short term rates have been rising on the main Far East Asian to north European port route, the world's most important trade channel, since hitting lows in March. At that point the market average price for a 40-foot container stood at US$552, now it's climbed to $1,172.
"On the face of it, this is a strong development for containership companies, but the industry has been undermined by weak fundamentals for so long that it's not quite that simple," said Mr Berglund.
He points to structural problems within the segment, with 2016 beginning with severe overcapacity. In the last calendar year 208 newbuilds were introduced to a market already awash with new megaships, leading to an 8.1 per cent oversupply of TEU.
"There's simply been too much space and not enough demand," Mr Berglund said. "European economies remain fragile, US inventory levels are high and Chinese imports have receded as a result."