At the start of 2013, the freight rate level was already below the long term average with the carriers looking at ways to push rates upwards.
Despite carriers announcing increases from mid-April and the start of June, these have failed, and the only GRI which succeeded this year was the increase from 15th March, and this was only short-lived.
We are now seeing rate levels of between USD 500 and USD 750 per TEU below those at the start of January.
The main reason for the reductions is all too familiar. Imports from Far East are not meeting carriers expectations, and with considerable extra capacity in the market, all operators are fighting to fill extra space available.
The carriers have taken various measures to stop the falling market, blank sailings and removing smaller capacity vessels in some cases, however this has not been anywhere near enough to readjust the supply to current demand.
They are now looking at removing certain loops in their entirety, which will have a much greater impact on the available space, and this is necessary for the carriers to avoid further serious financial losses in the coming months.
We have just released rates valid from 23rd May through to the end of June, which are reduced further from earlier this month.
The next available period when rates are likely to increase is from 1st July, when the start of Christmas orders will be moving and traditionally is a peak season period.
We have already seen various notices outlining the carrier’s intention of increasing rates from this date, and we believe that they will stand a good chance of pushing through substantial rises.
Hapag Lloyd has announced increases of USD 1000 per TEU from 1st July, and a peak season surcharge of USD 500 per TEU from 1st August to 30th September.
Maersk & MSC have both announced rate increases of USD 750 per TEU from 1st July.
All other carriers are likely to follow suit with similar announcements over the next couple of weeks, and although the final increase is likely to be less than these advertised figures, it is clear that with all carriers making losses in the 2nd quarter this year, that rates will increase from 1st July, as present levels are unsustainable.
We would recommend any current orders are pushed through as quickly as possible to take advantage of these low rates and ship before the 30th June.
Global Container Services will continue to negotiate hard with our main carriers to mitigate the increase, and we will update our customers as usual nearer the time.