Fastnet Forwarding
tel: +44 (0) 1582 765 531

News
Rates pick up ahead of contract season on Asia-ECNA

Rates pick up ahead of contract season on Asia-ECNA

Container volumes rise 7.9% to the US East and Gulf coasts in 2017, far outpacing the 1.3% rise to the West Coast, but prices remain under pressure

Spot rates have recovered in the past few weeks on the Asia-US East Coast trade, although they remain well below the same period last year despite strong recent demand growth.

According to the World Container Index, assessed by Drewry, average spot rates from Shanghai to New York rose 18% last week to $2,869 per loaded 40 ft box (feu), although they remain 20% lower than the same period last year. Figures published on 19 January on the Shanghai Containerised Freight Index suggest that Asia-US east coast spot rates will climb a further 7% this week. But while the East Coast market is expected to continue seeing strong demand in 2018, rising capacity is likely to prevent significant rises in freight rates this year, analysis by Drewy reveals.

Thanks in part to the deployment of larger vessels on the trade, container shipments from Asia to the US East and Gulf coasts grew by 7.9% in 2017, far outpacing the 1.3% uplift in imports to the West Coast, according to data from PIERS. Drewy reported that the mismatch in the growth rates saw the East and Gulf ports increase their share of the market to 34.4%, up from 33% in 2016.

It noted that the shift in the coastal balance eastward has been a constant trend in the past five years, but having slowed in 2016 it reasserted itself last year following the expansion of the Panama Canal mid-2016 that spurred lines to upgrade ships on that route. The 7.9% rise in imports to either East or Gulf ports seen last year “dwarfed” the 4.4% hike of 2016.

“The immediate outlook for US West Coast ports, which have lost approximately 7 points market share over the past six years, is not promising and they are unlikely to be able to arrest the decline anytime soon, although with a large gateway market on their doorstep they should be able to keep the lion’s share of traffic for a number of years yet,” Drewry added.

Combined flows from Asia to all US coasts surpassed 15 million teu last year, rising by 3.5% against 2016. But when data for the faster growing Canada and Mexico markets becomes available, Drewry expect the annual rate for the total eastbound Transpacific to inflate to just short of 6%.

“For this year, we expect headhaul transpacific volumes to increase again, but at a slightly lower rate of around 4.5%, with East and Gulf coasts taking further bites out of the West coast’s dominance,” the container shipping analyst said. “With larger ships now hitting the water on the East Coast run, the competition is becoming fiercer by the day.”

The average size of a ship serving the Asia-USEC (via Panama) loop has grown by over 10% in the last 12 months, with fourteen 10,000 teu plus vessels on parade, Drewry noted, adding that more vessels in the larger size band “will inevitably follow”. In keeping with the general upsizing trend, as part of the THE Alliance, Hapag-Lloyd is planning to switch out four units of 8,700-10,000 teu from its Asia-ECNA via Suez EC4 service with 13,000 teu ships.

Even with the phasing in of bigger ships, the available capacity from Asia to ECNA available to shippers has been relatively stable for a year or so, although as things stand, Drewry expects February’s slots will be around 20% greater than the same month last year, unless more void sailings are announced to coincide with the post-Chinese New Year demand lull.

“Ship utilisation hasn’t generally been an issue for carriers with headhaul ships full to brimming from July through October, although it does seem lines were caught out by a disappointing November when year-on-year volume growth was only half that of October, resulting in a sharp fall in utilisation to around 85%,” Drewy noted.

“Despite the mostly supportive conditions, spot rates on the trade have been trending down for over a year, indicative of cut-throat pricing activity. There is likely to be further competitive friction if SM Line fulfils its plan to launch its first all-water USEC service by May 2018.”

Nonetheless, there has been some respite from the price erosion for carriers, with representative 40ft spot rates adding around $1,000 since the start of January, Drewry noted.

“There is more room for growth before Chinese New Year when demand spikes, but the extent of the inevitable fall-off after CNY will depend on both carriers’ capacity management and pricing discipline with the final resting point setting the benchmark for annual contract negotiations,” it added. “Carriers face an uphill battle as even after the recent upturn, spot rates remain nearly 20% down on mid-January 2017.”

It concluded: “The East Coast market will remain in the ascendancy in 2018, but new competition and difficulties juggling supply with demand might prevent carriers from fully realising the benefits in significantly higher freight rates.”

OTHER NEWS STORIES

Long-term decline in shipping losses continues

Long-term decline in shipping losses continues

2015 was the safest year in shipping for a decade, but economic pressures, cyber risk and superstorms challenge safety progress • 85 large ships lost worldwide in 2015, down by 45% over a decade • Total losses in the British Isles down year-on-year. Region remains top long-term...

> Read Full Story

Forwarders face stricter enforcement of trade rules

Forwarders face stricter enforcement of trade rules

BIFA says customs authorities placing ever-increasing emphasis on compliance, particularly after 1 May UCC deadline, stressing need to ‘know’ customers and beware of VAT fraud issues The British International Freight Association (BIFA) says customs authorities are placing...

> Read Full Story

UK Is World’s Top Maritime Business Hub

UK Is World’s Top Maritime Business Hub

The UK is the world’s leading maritime business services hub as the country’s companies offering marine insurance, shipbroking, legal services and education contribute GBP 4.4 billion (USD 6.3 billion) to the economy and employ over 10,000 people, UK maritime trade promotion body...

> Read Full Story

World’s Biggest Lock Officially Opened

World’s Biggest Lock Officially Opened

The Kieldrecht lock at the Belgium’s Port of Antwerp has been inaugurated today when H.M. King of Belgium officially opened this, now the world’s largest lock, by pressing the button to symbolically mark the inauguration. King Filip of Belgium was joined by MM....

> Read Full Story

SOLAS container mass verification requirements

SOLAS container mass verification requirements

The declaration of the accurate gross mass of a packed container is critical to maritime safety, writes the International Maritime Organization, as it publishes its new FAQ document What are the new rules? On 1 July 2016, new requirements to verify the gross mass of a packed container enter...

> Read Full Story

Latin American and Caribbean Ports with Highest Container Throughput

Latin American and Caribbean Ports with Highest Container Throughput

The movement of containerized cargo through Latin American and Caribbean ports grew 1.7 percent during 2015, according to Economic Commission for Latin America and the Caribbean’s (ECLAC) ranking of container port throughput. ECLAC said these figures confirm two trends observed during the...

> Read Full Story

Container shipping consolidation will not return sector to profitability

Container shipping consolidation will not return sector to profitability

Analyst say alliances along with M&A activity are responses to the low-growth industry Consolidation of the container shipping business will not return the sector to profitability, according to one leading equity analyst. Lines have been re-drawing the container shipping market in a bid...

> Read Full Story

Fallout begins from Hanjin bankruptcy

Fallout begins from Hanjin bankruptcy

Cargo customers of Hanjin Shipping have begun dealing with the widespread fallout from the carrier’s collapse yesterday in what is said to be the largest ever bankruptcy of a global container line, with significant delays to some cargo expected and the potential need to arrange replacement...

> Read Full Story

Virgin Atlantic Cargo welcomes A350 capacity boost

Virgin Atlantic Cargo welcomes A350 capacity boost

US$4.4bn order for new-generation aircraft will bring carrier’s ‘most capable cargo aircraft’ and a significant increase in uplift capability from 2019 Virgin Atlantic’s new US$4.4 billion order for 12 Airbus A350-1000 aircraft will mark the arrival from 2019 of the most...

> Read Full Story

FTA warns against ‘premature’ UK exit from EU customs union

FTA warns against ‘premature’ UK exit from EU customs union

Freight Transport Association urges government to speak to logistics industry on challenges surrounding Brexit The UK’s Freight Transport Association (FTA) has warned against the UK quitting the European customs union before leaving the EU itself and has invited the government to meet with...

> Read Full Story

India, Russia and Iran Consider Intermodal Route

India, Russia and Iran Consider Intermodal Route

Iran, Russia and India have revived long-stalled discussions on a multimodal North-South Transportation Corridor linking Mumbai to the port of Bandar Abbas to Moscow. The 4,000 mile intermodal route would bypass the Suez Canal, cutting weeks off of the sea route transit time from the Arabian Sea to...

> Read Full Story

UK to seek bespoke ‘customs agreement’ with EU

UK to seek bespoke ‘customs agreement’ with EU

Prime Minister confirms intention to leave European Union ‘single market’ but wants ‘the freest possible trade in goods and services’ UK Prime Minister Theresa May today confirmed that she intends to take Britain out of the European Union’s ‘single...

> Read Full Story

Ocean freight rates soar from North Europe to Asia

Ocean freight rates soar from North Europe to Asia

Spot prices up 45% on back-haul market due to strong eastbound volumes, especially to China, plus service cuts post-Chinese New Year Spot container freight rates from North Europe to China rose 45% last week to a four-year high of more than US$1,000 per feu due to unexpectedly strong eastbound...

> Read Full Story

Mitsui O.S.K. Lines (MOL) has taken delivery of the world’s largest containership

Mitsui O.S.K. Lines (MOL) has taken delivery of the world’s largest containership

Mitsui O.S.K. Lines (MOL) has taken delivery of the world’s largest containership, the 20,170 TEU MOL Triumph, which will operate on The Alliance’s Asia-Europe trade from next month and offer 25-30% fuel and emissions savings compared with 14,000 TEU-class containerships. It is the...

> Read Full Story

Global ocean freight rates up one-third in first half of 2017

Global ocean freight rates up one-third in first half of 2017

Big increases across most trade lanes push average spot prices 36% above the ‘exceptionally poor’ levels last year, Drewry analysis reveals Global spot market freight rates were more than one-third higher in the first-half of 2017, with big increases across most trade lanes providing...

> Read Full Story

Hong Kong’s port and airport closed as Typhoon Hato makes landfall

Hong Kong’s port and airport closed as Typhoon Hato makes landfall

Hundreds of flights cancelled and Hong Kong’s stock market closed until Thursday Hong Kong and its world-leading airline and container shipping hubs were in shutdown mode today as the city was battered by Typhoon Hato. As the city awoke this morning the storm was given a danger level of...

> Read Full Story

US ports prepare to reopen

US ports prepare to reopen

Savannah says workforce returning today and no damage from Hurricane Irma to Garden City Terminal or containers, while cargo flights resume at MIA Some US ports including the Port of Savannah in Georgia are prepare to reopen after assessing damage and flooding from Hurricane...

> Read Full Story

Global air freight spend rose 25% in Q4

Global air freight spend rose 25% in Q4

Global air freight revenues rose by 25%, year on year (YoY), in the fourth quarter of 2017 as the bumper year ended with an exceptionally lucrative peak season for air cargo carriers. Although YoY volume growth slowed to 6.6% in the final quarter, partly because of a tough comparison against the...

> Read Full Story

New US tariffs could trigger trade war retailer body warns

New US tariffs could trigger trade war retailer body warns

Immediate impact would be higher prices for American consumers with possible loss of cargo volume in long term New tariffs on steel and aluminium imports imposed by the US last week could spark an international trade war and also result in a negative impact on containerised imports in the longer...

> Read Full Story

CMA CGM to operate Nigeria’s first deepsea box terminal

CMA CGM to operate Nigeria’s first deepsea box terminal

Lekki Port’s future container facility expected to help reduce congestion in the port of Lagos and become the deepest port in sub-Saharan Africa Global container shipping group CMA CGM and Lekki Port LFTZ Enterprise (LPLE) have signed a Memorandum of Agreement (MoA) to operate a new...

> Read Full Story

British ports welcome Brexit ‘Customs Backstop’

British ports welcome Brexit ‘Customs Backstop’

BPA says proposed arrangements from UK government ‘will give ports and freight operators a measure of short-term certainty’ The British Ports Association has welcomed the publication yesterday by the UK government of the temporary customs arrangement, the so-called ‘customs...

> Read Full Story

MSC drops Felixstowe as IT-related delays continue

MSC drops Felixstowe as IT-related delays continue

Problems following installation of new terminal operating system sees MSC head to London Gateway Mediterranean Shipping Co has joined Maersk units Hamburg Süd and Seago in diverting vessels away from Felixstowe as the UK’s main gateway port continues to suffer from severe...

> Read Full Story

Felixstowe disruptions continue

Felixstowe disruptions continue

Freight forwarders and container lines are continuing to report ongoing disruptions to operations at the Port of Felixstowe resulting from the upgrade of the leading UK container port’s Terminal Operating System (TOS) last month. Carriers such as Maersk Line report delayed berthing in...

> Read Full Story

OOCL drops Felixstowe calls as disruption continues

OOCL drops Felixstowe calls as disruption continues

Continuing delays at the UK’s busiest container port cause line to switch the UK call of its North Europe-Turkey service to Southampton Continuing delays and disruptions at the UK’s busiest container port, Felixstowe, has led container line OOCL to switch the UK call on its North...

> Read Full Story

Air freight prices up 12%, year on year

Air freight prices up 12%, year on year

Average worldwide yields dropped slightly to US$1.88 in July 2018, 0.6% lower than in June, but still significantly higher than in July 2017, reports WorldACD Average global air freight prices remain up 12%, year on year, in US dollar terms, despite a slowing of growth in the last few months and...

> Read Full Story

Ocean rates drop as Asia-Europe box peak season ends

Ocean rates drop as Asia-Europe box peak season ends

Container lines hoping for a spike in Asia-Europe westbound freight rates as shippers stock up inventory ahead of the holiday season seem certain to be disappointed. And, with spot rates failing to show any sign upward momentum this month, some analysts expect bearish spot rates to put downward...

> Read Full Story

RHA rejects assurances about post-Brexit Calais delays - 14 January, 2019

RHA rejects assurances about post-Brexit Calais delays - 14 January, 2019

Road Haulage Association says claims by port boss that trucks will not undergo extra checks is ‘completely misleading’ The UK’s Road Haulage Association (RHA) has challenged claims by the president of the Port of Calais, Jean-Marc Puissesseau, that the port is ready for a...

> Read Full Story

Brexit Update 14.01.19

Brexit Update 14.01.19

Despite the political turmoil in the UK, we are still no nearer to a conclusion on BREXIT and as time goes on a ‘No Deal’ scenario is still possible. It is our opinion that neither the UK nor the EU have the capacity to cope with the Customs formalities required, for the sheer...

> Read Full Story

A Guide to Exporting from the UK to the European Union – Day One No Deal (Hard Brexit)

A Guide to Exporting from the UK to the European Union – Day One No Deal (Hard Brexit)

A Guide to Exporting from the UK to the European Union Day One No Deal (Hard Brexit) Exports to the European Union - Methods of Export  NCTS T-form – To move goods from UK to an approved office/point of destination in any EU Country. TIR Carnet – To move goods from UK to...

> Read Full Story

US shelves planned China tariff rise ‘until further notice’

US shelves planned China tariff rise ‘until further notice’

US trade officials today confirmed that the US will suspend “until further notice” its threatened increase in tariffs on $200 billion of Chinese imports, a delay that President Donald Trump had unofficially suggested last weekend, thanks to apparent progress by the world’s two...

> Read Full Story

Ocean freight rates set to remain subdued

Ocean freight rates set to remain subdued

26 April 2019 Low demand growth on the Asia-Europe trade will keep a lid on spot price gains, says MSI, while recent transpacific price rises seem to have stalled since March The spot freight rate outlook is “underwhelming” for the container shipping sector despite the best recent...

> Read Full Story

US-China trade war may benefit shipping

US-China trade war may benefit shipping

Will Waters | Tuesday, 25 June 2019 Escalating economic hostilities between the two countries is bad news for the transpacific container trade but should result in higher volumes of intermediate goods, notes Drewry   The escalating US-China trade war may be bad news for the...

> Read Full Story