Shipping
MODEST RISE IN FREIGHT RATES EXPECTED
July 7, 2016

Container freight rates are expected to improve modestly over the next 18 months from the recent all-time lows, according to the latest Container Forecaster report from shipping consultancy Drewry.

 

According to Drewry, which says that there are parallels between the current situation and what happened during the global financial crisis in 2008-2009, unit industry income has fallen to record lows and container carriers are estimated to have signed away US$10 billion in revenue in this year’s contract rate negotiations on the two main East-West trades.

 

“For 2017, Drewry anticipates a slightly brighter picture with global freight rates forecast to improve by about 8%,” said Neil Dekker, director of container research at the consultancy. “Carriers are expected to take some action to address overcapacity as cashflow attrition becomes more urgent and BCO rates rise from this year’s lows. But once again, this cannot be seen as a genuine recovery since these so-called improvements must be set in context against the unnecessarily big rate declines seen in both 2015 and 2016.”

 

The G6 alliance’s recent decision to remove a weekly loop from the Asia-North Europe trade is a positive development, but other similar proactive measures will need to be taken around the world if the recent improvements are to gain momentum, said Drewry.