Ocean container shipping rates are not quite as in the toilet so far in 2017 as they were the previous year, but the trend line remains down, and container carriers will continue to struggle to find profitability in 2017.
Supply Chain Digest Says... |
|
|
That in the end is the takeaway from a recent rather rambling post on rates in the Drewry Container Insight blog, though the analysts at Drewry believe that overall the container carriers can do a bit better in 2017 than they did financially in the disastrous 2016, though rates will still stay low for shippers.
Drewry’s East-West Freight Rate Index, which is a weighted average of spot rates in both headhaul and backhaul lanes from its Container Freight Rate Insight database, was up by 40% versus the same period last year, as shown in in the graphic below.
That said, average rates in Q1 were down by 15%.versus 2015, which was hardly a gangbuster year for container shipping prices.
And the long term trend remains sharply down. As seen in the chart below from Drewry, which provides a linear regression analysis of Asia to US and Euro markets since the start of 2013, while spot rates have as usual risen and fallen with high degrees of volatility over the period, the trend line remains strongly in the favor of shippers.
"Based on the past four years of data in this series it is clear that carriers are constantly fighting against a long-term downturn in rates that previous upturns have failed to arrest," Drewry notes.
(See More Below)
|
CATEGORY SPONSOR: SOFTEON |
|
|
| |
|
|
Drewry says the extent of the severe East-West rate downturn from early summer 2015 to late summer 2016 was the function of weaker supply and demand fundamentals, when carriers fell victim to a toxic combination of low demand growth running parallel with a big rise in new capacity.
The recent modest reversal in carrier fortunes has come about after intense efforts to lower the supply expansion, structurally through greater scrapping and more temporary fixes in the form of idling and void sailings, Drewry says.
In the end, shippers are likely to retain the upper hand, Drewry notes.
"For the time being carriers are enjoying a spot market renaissance but the long-term trend will continue to point downwards," Drewry writes.
That said, Drewry also believes that with the modest improvement in rates it predicts for 2017, the container carriers ought to largely be able to eke out a profit for a change in Asia to Western port operations.
Will rates for containr shipper rise in 2017? Why or why not? Let us know your thoughts at the Feedback section below.
Your Comments/Feedback
|
