Tuesday, April 30, 2019

Shipping: Decline In Box Rates Flattens Out

From Freightwaves via Benzinga:
Box shipping executives may allow themselves a small sigh of relief as the latest freight rates data shows that the recent decline in freight rates appears to have stopped. And, on some routes, it's even marginally increasing.

Although containerized freight rates on all routes in Drewry Supply Chain Advisor's World Container Index were, essentially, flat, they were flat on the happy side of zero. Or, in other words, routes on each route were a tiny bit up compared to the week before.

Composite index
Drewry's composite index of eight main shipping routes stood at US$1,342 at the end of last week for a forty foot equivalent unit (FEU) international shipping container. All dollar figures hereafter are US dollars. That figure is a $12 increase on the week before and it represents a 0.9 percent rise in rates. On a five week average, the composite index is gaining about $12 a forty-foot box each week. The mean average on the composite index for the last five weeks is $1,345 / FEU which is close to the current rate.

Rates on the back-haul route of Los-Angeles to Shanghai are remarkably flat at $500 / FEU, and which is unchanged from the week before. The week before that, i.e. early to mid-April, rates were $502 / FEU. Accordingly, the difference per box and the percentage change between last week and the week prior is zero. That said, on a five week average basis, the route is losing $3.40 / FEU per week. And that's because there was a bit of a drop in rates at the end of March. The average rate on this route over the last five weeks was $508 / FEU per week.

Shanghai-Los Angeles saw a bit of a jump in absolute numbers last week although, in percentage terms, the hike wasn't anything to write home about. Rates jumped by $38 / FEU which is a 2.5 percent change. Rates were flat the week before last and took a bit of a battering the week before, so this gain will be welcome to ocean carriers. On a five week average, this route is fattening-up by about $30 / FEU per week. Meanwhile, current rates are about $12 / FEU under the five week average of $1,554 / FEU.

The highest priced route on the trans-Pacific is the  Shanghai-New York. Rates on this route stand at $2,673 / FEU, which is essentially flat as there was a dollar per FEU gain. That represents a 0.04 percent gain. Rates are flat now, after a period of volatility. There was a $373 surge in early April followed by a $120 slump the week after. And, in mid-ish March, there was an $89 fall. Perhaps a period of calm will be welcomed by both shippers and carriers alike. In any event, owing to the $373 surge a few weeks ago, this route is fattening-up by $64 / FEU per week. That growth figure cannot be sustained unless there is another rates surge in the coming weeks. The current rate on this route has overshot the five week average by about $27 / FEU, so perhaps a decline in rates is on the way.

Drewry opts to examine the New York-Rotterdam route in both directions to assess Atlantic basin rates. The US-Europe route is the back-haul and Drewry assess its rates at $534 / FEU. It's a pretty flat route, with only a few dollars change each week since early April. That said, it lost about $27 at the end of March. Rates are unchanged for the last couple of weeks in April. The average rate for this route over the last five weeks is $537 / FEU, just a couple of dollars more than the current rate. The route is currently losing, on a five week average, about $6.40 / FEU a week owing to that rates drop in early April. Unless there is somewhat of a decline in rates in a week or two, that average weekly loss will start to level out and disappear.

The big route in the Atlantic is Rotterdam-New York. Unlike many of the other routes assessed by Drewry, this route has been putting on weight – it has recorded increases in three out of the last five weeks. And one of those weeks saw a 15.3 percent change. But this week, nothing. It's unchanged at $2,302 / FEU. It may be worth noting that the current rate is a fair bit above the five week average, by about $185 / FEU. The overall trend over the last five weeks has been up, with the route putting on dollars at the rate of $64.60 / FEU per week....MORE