Dive Brief:
- While carriers announced new freight all kinds (FAK) prices and general rate increases (GRIs) for next week, a harbinger in the form of a rise in the Shanghai Containerized Freight Index (SCFI) has occurred, with the spot rate China-North Europe trade jumping 9.3%, rising $63 to reach $744 per TEU.
- Growth in China and U.S. routes was greater still last week, with the transpacific lane to the US west coast increasing 10.7%, finishing at $1,512 per 40 feet, and the Asia-US east coast route gaining 18.2% to break the $2,000 per 40 feet barrier to finish at $2,075.
- Yet rate levels remain below last year's height. Drewry’s reports that the Shanghai-Rotterdam rate is down 9%, and Shanghai-Los Angeles and Shanghai-New York rates are down 31% and 30% respectively. The nine month period ending September 30 revealed however that total volumes increased by 6.2% year-on-year and revenue improved by 19%.
Dive Insight:
Rates, like everything else related to ocean cargo, have had a rocky year.
When rates fell in June, there was a general feeling of regained balance within the industry, yet just a month later, Drewry predicted a 16% rate increase for the year. August saw another spike, with the start of peak shipping season.
There are optimists and pessimists in every business: the shipping industry happens to be under greater scrutiny due to past overcapacity and a messy, costly bankruptcy that left affected shippers clamoring for recompense. Now, with only 11 lines — down from 20 — and carrier consolidation seemingly at a standstill, lower capacity should have the desired effect: stability. With just two months left in 2017, it will be interesting to note just how close the industry comes to that previously predicted 16% or $5 billion dollar gain. Experts are foreseeing a busy holiday; let's see what it brings for shipping.
