Shipping lines start 2017 in dominant position

As we step into 2017 the shipping lines are looking at what they hope will be a steadily firming market.

The Shanghai Shipping Exchange’s Shanghai Containerised Freight Index showed that spot rates from Asia to Europe reached their highest level at the end of December, continuing a steady increase that began late in the first quarter ultimately rising over 80% by the end of the year.

The SCFI* index is an indicator of market conditions and NOT a market rate. All our rates are negotiated directly with shipping lines and are consistently below the headline SCFI rates

The SCFI rate rose 11% in the last week of the year indicating that the surge in demand that began in September is continuing with no signs of slowing down ahead of the Chinese New Year on 28th January.

The lines remain hopeful that their rates will maintain the momentum they have built up, especially in the run up to CNY, as factories on the mainland prepare to close for two weeks and shippers rush to get their orders out of Asia and into their supply chains before that happens.

The race for space has left many shippers, particularly those on low contract rates, facing difficulties in securing slots on Asia-Europe vessels, as the lines cherry-pick the highest yielding cargo, with some ports reporting two week rollover’s.HKG

Some analysts expect demand for space to head the other way in February, which is why some liner alliances have already announced sailing cancellations ahead of the traditional sharp decline in cargo bookings that follow the mainland’s biggest annual holiday.

The lines will be hopeful that this temporary volume reduction together with 2016’s record tonnage scrapping and minimal new build addition will help them maintain their rates upward trajectory.

Only time will tell.