Average spot rates are now past the peak. Until another freak event occurs, that is
Container spot rates are falling – and are unlikely to see any noticeable edge up for the remainder of what has been a record-breaking 2021, multiple analysts polled by Splash have predicted.
Liner shipping is on course to smash profits in excess of $150bn this year, more than five times their previous best cumulative effort as rates soared to highs never seen before.
However, as the peak season has passed and carriers focus on getting more clients fixed to long term contracts, the spot market has entered free-fall.
Last week saw the biggest week-on-week drop of Drewry’s World Composite Index since November 30, 2017, a global spot rate indicator, which plunged 4.9% in the first week of the month.
“We think spot rates will probably continue to slide through the rest of the year, but that they will remain at high levels, feeding into strong contract rates next year,” Drewry’s Simon Heaney told Splash.
“At Xeneta we clearly see a tendency that average spot rates are now past the peak. Until another freak event occurs, that is,” commented Peter Sand, who this month joined Xeneta as chief analyst after 12 years at BIMCO.
Shabsie Levy, founder of digital freight forwarding company Shifl, commented: “With the holiday shopping rush seemingly over and the already ordered goods sitting inside thousands of containers on many ships across the USA, the drop-in freight rates on the spot market continues into November.”
Across the three main long distance high volume trades out of Asia heading towards the US and EU, spot rates in November have fallen from the end of October. Moreover, some carriers are now removing or not keeping previous surcharges.
A pre-Lunar New Year rush is likely to turn the spot tide in early January, both Sand and Levy predicted.
“After Chinese New Year as we head into the traditionally quieter months, I’m confident we will see the rates on a stable downward trajectory” Shifl’s Levy said.
For long-term rates, Sand said they are holding steady across the main lanes for the time being.
Shippers hoping to bag bargain ocean freight prices anytime soon are likely to face disappointment.
Writing on LinkedIn, Lars Jensen, CEO of container advisory Vespucci Maritime, warned: “You need to expect a new normal where rate levels in general are stronger than 2019, but of course a lot lower than right now. Not because of the pandemic and bottlenecks. This would have happened anyway and is a consequence of the consolidation in the industry which has increased market power with the carriers.”
Source : Splash247