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Freight prices from China 2017

We thought you might be interested to know the trends in 2017 for the sea freight container market from the Far East and China in particular to the UK.

According to consultancy Xeneta, container lines operating on Asia-Europe trades aretaking stronger measures” than usual to maintain the recent recovery in ocean freight prices. These stronger measures amount to a 33% cut in sailings immediately prior to Chinese New Year followed by 43% cuts in sailing post Chinese New Year. How long shipping lines can keep so many ships idle is anyone’s guess – though they must also be under pressure to use their assets and not keep ships at anchor.

Whether this will keep the rates up, is still to be seen, though so far increases imposed since the beginning of the year have held and the post Chinese New Year slide hasn’t happened.

Traditionally the smaller, weaker shipping lines have been the ones to break ranks when it comes to price reductions.  It seems that the new shipping line alliances now in place, of which there are now just four covering all major world trade lanes, from the start of this year have more efficient capacity management measures in place.  In other words they have a tighter grip on alliance members who try and discount the market, so it may stay a seller’s market for some time to come, with rate remaining static.

In addition to lines’ success at pushing through price increases, the various reductions in sailings have affected all regular users of container ships from the Far East. Some lines have void or blank sailings with certain services not operating at all, meaning that bookings ‘roll-over’ due to ship cancellations, often at very short notice. Other shipping lines have operated all their scheduled services out of China and the Far East and then terminated their ships at a hub port, typically Tanjung Pelepas, with around a half of ships re-loaded and carrying on to Europe. The other half are then taken out of service, temporarily kept at anchor and then returned to China.  This has led to huge backlogs at these hub ports, which again has led to delays.

It does seem that shipping lines are taking the view that recovering their revenue is more important than customer service – Maersk for example posted a $ 1.9 billion loss for 2016 and the signs are that all the world’s major shipping lines made a loss in 2016 to a greater or lesser extent, with one failing completely (Hanjin).

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