Far East freight rates fall, yet again!

As our regular customers will know, Far East freight rates from China and others have been on a roller coaster ride for much of the year and currently are now at an all time low.

Why are Far East Freight Rates Falling?

It may seem odd that a mature market dominated by four large consortia should behave in this way especially when the latest estimates conclude that the China to Europe container import industry is still growing. However, capacity has grown exponentially, especially on the China to North Europe trade lane. This is exclusively down to the increasing size of ships being used.  Ships now coming into service are around 20000 TEU  (TEU being a 20ft container). Ten years ago the biggest ships being built were around 10000 TEU whereas twenty years ago ships were half this size.

This fixation with operating the biggest ships that are able to grab market share with the lowest per container shipping costs has flooded the market. The capacity which entirely predictably has then in turn caused rates to collapse.

How will this Effect Prices?

The question many of our customers are asking is what effect will this have on prices for the rest of 2015? Unfortunately nobody knows for sure as one hand there is an excess of capacity, but on the other hand all the shipping lines seem determined to somehow drive up rates so that their new ships make an operating profit. We think that current prices are likely to increase by around 20% with any serious sustained price hikes taking effect in late August, driven by autumn season retail stock.

Are you enjoying the benefit of current low sea freight import container rates from China? Do you suspect that the drops in prices through 2015 have not been passed on to you?  If you are in any doubt at all, why not give us a call on 01606 331103 or mail us on enquiries@klfreight.com. With 35 years of experience in freight forwarding, K&L Freight are able to assist.