Freight Shipping News
SHIPPING INDUSTRY NEWS - 20th December 2013
Freight rates from Asia to Europe suddenly jumped over the last week and the highs are expected to last longer than usual as cargo is rolled by carriers.
The latest figures from the Shanghai Containerised Freight Index show that all-in spot prices from Shanghai to northern Europe increased to $1,586 per teu, an increase of $599 compared with last week — a 61% increase.
On services from Shanghai to the Mediterranean, prices increased by $586 week on week to $1,586 per teu.
The increase in prices follows the mid-December general rate increase announced by shipping lines in November of $750-$800 per teu.
Richard Ward, an analyst from box derivatives broker Freight Investor Services, said the increase would probably last as shippers struggled to secure space on ships.
“The increase has reversed the steady declines we have seen over the past five weeks and will be welcomed with open arms from carriers who have yet again struggled to turn a profit for the year.
“At present it is unlikely the market will erode as quickly as we have seen over the past few months due to reports of roll pools as shippers struggle to get cargo away.
“December is also usually relatively quiet due to the Christmas holidays, which will offer additional support to current levels.
“With this in mind, rates going into January are likely to remain at healthy levels and will be above the average rate of $1,072 per teu seen in the spot market on north-west Europe this year.”
Mr Ward said freight forwarders that had hedged against freight rate increases had been able to secure December at between $1,000-$1,150 per teu, compared with the SCFI index level of $1,586 per teu.
Looking ahead, Mr Ward said he expected rate swings to continue next year as carriers struggle to reduce capacity for extended periods.
“These rate swings have been on the increase since the end of 2011 as a result of the continued oversupply and worryingly for carriers has also spilled over to routes outside of north-west Europe,” he said.
For the first quarter of next year, Forward Freight Agreements are being settled at between $1,000-$1,500 per teu on the Asia to north-west Europe route.
The rate increase kicked in weeks after the European Commission announced it had launched an investigation into 14 leading shipping lines to see whether they had breached competition rules by signalling their price intentions to each other.
Brussels is to examine whether the shipping lines engaged in concerted practices, saying that since 2009 the companies have made regular public announcements of their price-increase intentions through statements on their websites and in the specialist trade press.