Gloomy Outlook for Container Lines

  • Gloomy Outlook for Container Lines

    Gloomy Outlook for Container Lines

    Container spot rates from Asia to North Europe slumped this week, losing about 4% in value.

    Following the Chinese Golden Week holiday, spot rates are continuing to slide and are now trending below long-term rates. The short-term market has had a significant impact on annual contract rates, and as such, ocean lines will be using all ammunition in the coming weeks to attempt to prop-up the spot market, including radical service cuts via blanked sailings.

    Michael Braun, director value engineering at freight rate benchmarking analyst Xeneta, noted a “significant change in the last couple of weeks”, and that “for the first time in 18 months we are seeing the long-term and short-term markets on the same level” in its Ocean Freight Shipping Prices Review presentation yesterday. Xeneta chief executive Patrik Berglund, noted that this is a warning to the industry that the market could be “turning for the worse”.  However, Mr Berglund added the caveat that the market was “still healthy for liners”, given the progress with rate increases made in the first three quarters of this year.

    Ocean carriers have yet to announce their winter blanking programs, which suggest either that a rate war is forthcoming, or that there will be a drastic blanking of voyages, as ocean carriers appear to be taking steps to push rates back up ahead of contract negotiations with shippers.

    Meanwhile, the Shanghai Containerized Freight Index (SCFI) recorded a big 9.5% drop for spot rates from Asia to the US east coast.  For the west coast, the damage was not as severe, dipping 3.3%

    To see how your bottom line can be impacting, and to obtain spot rate quotes for your containerized cargo, please contact info@pngworldwide.com

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