![]() Will we ever see a return to 2015-16’s Asia-Europe spot rates of $200 to $300 per teu? No, but if we ever do, both I and the liner execs causing it, should find another industry to ruin.Covers disclaims all liability associated with your use of this website and use of any information contained on it. Will they ever go back down to long-term averages again? Very unlikely, carriers should have learnt their lesson. Will they go down to half of where they are now, in the near future? Unlikely. When will all of this end? Only a fool would guess, so being a fool, I’ll say it is unlikely to end during this year, and likely to run well into next year.Ĭan rates go further up in the coming weeks? Certainly! Can they go down a little? Also possible! Will they go to $30,000 per feu? Not impossible. All of these industries start to be profitable at 30-70% utilisation, but we can only be profitable at 90+% utilisation? Why is that? you can’t sell the space after the vessel has sailed – is not unique to container shipping, we share that with not just all other freight modes, but with airlines, hotels, taxis, restaurants, cinemas, grocery stores, newspaper advertising, etc, and an endless stream of liberal professions that sell their time. The core product being sold – time-perishable capacity, i.e. In the current stressed environment, I would wager that few shipping lines would be foolish enough to forgo cargo they have space for, in an attempt to keep rates high, but once this dies down a little, shipping line executives will start to seriously question why we’re the only industry that can only be profitable at full occupancy. When demand is strong and rate levels are as crazy as they are now, vessels don’t need to be full to be profitable. Oh, and the traditional peak season is starting now. On top of that, there have been massive drawdowns of inventories worldwide which will need to be replenished, and with US consumer demand for same-day and next-day shipping, we will need bigger inventories than in the past. Meanwhile, European consumers have not increased their spending on goods during the pandemic, but are rather holding back until lockdowns are lifted, so once the US consumers can shift their consumption back to services, the Europeans might take over. In the past 10 years, vessel incidents would be terrible for those immediately impacted, but they would not have any systemic impact, as the unaffected boxes and boxes waiting to be loaded would just go on the next half-empty ship, but all of the ships are full now. Yantian) and terminals, vessels being grounded due to quarantines, and the challenges of vessels getting stuck in canals, dropping boxes, or catching on fire. High freight rates are driven by equipment and space shortages, which in turn are driven by a confluence of unprecedented US demand (due to pandemic shifts from services to goods) and supply-side disruptions: Port congestion, Covid infections and quarantines in ports (e.g. All trades are up from last year, but the SCFI is a weighted average of nine different trades, and many trades are far from as high as Asia-Europe and transpacific, and in theory they can go much higher, but how high and what’s the ratio? These ratios are all unknown generally, and even more so in terms of how the ratios are split across different value classes of container shipments. As does the contagion of equipment shortages across trades: Asia-Europe is experiencing quite anaemic demand growth, but rates are through the roof because there’s no boxes to move the cargo that has to move, due to the transpacific soaking up all the empty boxes. As do the limited substitution options in air, rail, or near-sourcing. The contract versus spot ratio of course also plays a role.
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