Shipping costs defy Q1 2011 projections

A Lastest News about Transportation and Storage in China

Last updated: 22 Aug 2011

Announcements of freight rate increases from major shippers led analysts to project stronger prices this quarter. But new players have been reluctant to follow suit.

 

Container shipping prices were projected to increase 10 to 20 percent in Q1 2011. The rush to send out orders before the start of the Chinese New Year was expected to boost demand and drive up costs. In addition, many of the world's leading container shippers raised rates as early as Q4 2009.

 

Container shipping prices, however, have remained low.

 

The China Containerized Freight Index, which analyzes data from the country's 20 leading lines, ended 2010 at a low 1,053.93. The CCFI's composite index started falling in early September, after hitting a 2010-high of 1,214.7 in late August. The index showed signs of improvement, increasing slightly in the first two weeks of January 2011 to 1,065.32. It has since slipped, with end-January data pegged at 1,059.95.


This came despite higher charges from major container shippers. Maersk raised quotes for container cargo leaving China for Central and South America by $400 per TEU and $800 per dry FEU. Shipments to the Caribbean increased by $100 per TEU and $200 per FEU.

 

More shippers were expected to announce freight rate increases throughout the quarter. But many of the new players are hesitant to do so. Demand is not as high as industry projections and these entrants are concerned raising quotes will reduce their utilization rates and boost operating costs.


Richard Li Guanghua, researcher at the transport sector of Guojin Securities, said market prices for the European route were largely stable in January. Those for the US were more volatile. CCFI data for the US' west coast service, for instance, dropped to 998.94 from 1,015.88 points in mid-January, ending the month at 1,006.17.

 

Li said the outlook for the whole year will depend largely on the outcome of the contract negotiations in April. Until then, only soft projections could be made about the direction of shipping prices.

 

Read the full report at Global Sources, a leading business-to-business media company and a primary facilitator of trade with China manufacturers and India suppliers, providing essential sourcing information to volume buyers through our e-magazines, trade shows and industry research.


Posted: 21 February 2011, last updated 22 August 2011

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