Drewry: Contract Freight Rates to Soar 20-40% in 2017 - Specialty Containers Wellcamp-Professional Collection

In 2017, contract freight rates for most seaborne container trade surged 20 to 40 percent from 2016, container shipping analyst Drewry said recently. However, despite expectations of higher prices, Asian and European shippers have decided to wait until after Chinese New Year to sign long-term contracts, expecting spot rates to drop by then. In response to the move of some shipowners to delay signing annual contracts for the Asia-Nordic route due to the Chinese New Year, Drewry Research Manager Simon Heaney said: 'This is a reasonable strategic decision. There is a decline, and we will see that 2017 may also follow the pace of previous years.' However, there is also a risk that shippers will not gain much. 'What we do know is that there will be a backlog after the period of strong demand. So the late Lunar New Year decline may not be as dire as usual,' he said. But overall, spot rates in Asia and Europe will rise. Neildekker, director of research at Drewry, said the days of global container trade growing at an annual rate of 4 to 7 percent were 'long gone'. But he added that a trade expansion rate of 2.1% in 2017 would be somewhat positive for the market. He expects scrap rates to remain high in 2017 after setting a new record in 2016. However, the Gulf (capacity) will continue to grow, with 80 new ships to the global fleet exceeding 10,000 teu capacity this year, most of which will be deployed in the Asia-Europe trade, which will see more cascading ships elsewhere. Total container tank capacity is expected to increase by around 3.7% this year and by around 5.5% in 2018. Capacity growth in 2016 is expected to be 1.7%. On the demand side, dekker said that growth in Europe returned to growth in 2016 and will continue this year, while Africa and Latin America will also start growing again after a significant reduction last year. Total North American container demand is forecast to grow 2% this year, up slightly from 2016. 'Last year, transpac grew by about 3.2%, and we're forecasting a decline this year,' he added. Asia saw fairly weak growth in 2016 and demand is expected to be about 2% this year, slightly ahead of the South Asian boom in 2016. 'If there's one constant region, it's South Asia, not just India, but Pakistan and Bangladesh,' added decker. 'Last year Chittagong's capacity grew by about 15 percent, including a lot of clothing shipments.' Heaney said that in In terms of freight rates, 2016 was a 'two-part game'. Shippers dominated the first half of 2016 as prices plunged in the first quarter due to weak prices and oversupply in the Asia-Europe and Pacific region. In the second quarter, the tide turned and demand growth returned to positive territory, as operators' shrewd capacity management improved utilization. “Fuel prices went up and that was passed on to customers with higher baf prices.” Spot rates followed in the Hanjin incident as carriers focused more clearly on capacity management and shippers tried to reduce risk, he said. increased later. This trend started to emerge in the first few weeks of January. The transpac eastern spot price rose 35% year-on-year in the fourth quarter, South China to Australia rose 45%, and Asia Europe rose 67%. But heaney added that while those gains were impressive, they also 'proved in the first place what a terrible thing this is... We're starting from a very low base.' The recent increase in spot rates has been beneficial The carrier before annual contract negotiations, according to anecdotal reports, will “rise from 20% to 40% over the next 12 months”. In a separate report by Drewry Financial Research Services (dfrs), analysts say a gradual recovery in the freight market is a much-needed and positive development for the container shipping industry, but this could come at the cost of corporate weakening, especially in the Companies with heavy debt under heavy leverage. 'We expect that, despite this poor process, the year-over-year business cycle will drive more earnings towards the end of the year,' dfrs said. 'A key measure of industry health is the east-west load factor. Q2 And the average industrial utilization rate in the third quarter was 87% and 93%, which represents a decent state of affairs.' 'While this is not enough to cure the ills of the industry overnight, we believe this is a recovery of some degree of business. An important first step in common sense and financial soundness.'