Thursday, May 28, 2020

Analysts Predict an Uncertain Future for Container Shipping Rates

Pandemic Will Continue to Skew the Figures
Shipping News Feature

WORLDWIDE – Oslo based Xeneta, which provides market analyses for the shipping and logistics industry, has doubts that the effect on the container shipping sector, which have not it says proved as devastating as feared so far, will remain as positive looking into the future, as the Covid-19 pandemic continues to affect all aspects of industry.

With the collapse in demand, and glut of supply in the container vessel segment, analysts may have been fearing the worst for developments in long-term contracted ocean freight rates. However, despite the widespread ramifications of Coronavirus, rates held comparatively steady for the month of May.

Xeneta’s XSI® platform provides intelligence on the very latest ocean freight market moves. Based on crowd-sourced data from leading shippers, the report utilises over 200 million data points, covering more than 160,000 port-to-port pairings, which it claims provides a real-time picture of industry developments. The latest XSI® Public Indices report registered a 1.2% decline this month and follows a 0.7% increase in April, leaving the index up 1.7% for 2020 so far.

The unexpected rise in April, after a 0.5% fall in March, was attributed to the proactive strategies of container ship operators, who were withdrawing market capacity and adjusting sailings in an attempt to balance supply and demand. That approach continues to mitigate damage, while the gradual opening of national economies is giving some room for optimism according to Xeneta CEO Patrik Berglund, who says:

“Contracted rates have held up well, some would say surprisingly so, while spot rates on key routes have also stood strong. With some national governments stepping in to support the industry, such as those in South Korea and Taiwan, who have both announced emergency funding of $1 billion for shipping, a ‘blood bath’ has largely been avoided. Nevertheless, it’s early days and many owners have posted worse than expected Q1 results and, it has to be said, will be dreading going public with Q2 figures.

“The future, unfortunately, remains uncertain. It’s obviously not all doom and gloom for contracted rates, even though the challenges the industry (and indeed the world) face should not be underestimated. Owners and operators are clearly up for the fight and moving decisively when and wherever that’s possible. We can see clear evidence of that in the work of the Digital Container Shipping Association (DCSA), made up of the largest carriers, which is looking to introduce a paperless bill of lading and potentially save billions of dollars in costs.

“Shippers have to stay equally as limber in this environment, keeping up to speed with real-time market developments. Nobody knows what will happen next, but with the insights enabled through the latest data you can at least position your business to gain competitive advantage. That’s more essential now than ever.”

Photo: Courtesy of Port of Oakland