Healthy Demand Stabilises Container Shipping Spot Rates

AN improving demand scenario over the first half of 2017 in the container shipping industry is helping to stabilise freight rates so far this year, says BIMCO.

News ID: 76010

Date: 31 August 2017 - 09:25

According to MANA, BIMCO says the China Containerised Freight Index may provide a more realistic indication of industry conditions. The index touched a record low of 632.36 on April 29 last year and recovered to 859.5 on August 11 this year. From a year-to-date perspective, the index rose 20.7% compared with the year-ago period.
BIMCO notes that charter rates also jumped over the first four months of 2017, retraced levels and then recouped losses over June-July.
“The extreme volatility of previous years has been reduced for spot rates on the Shanghai-northern Europe trade lane. A sign of improving demand and better market conditions since fourth-quarter 2016.”
Robust demand — global container shipping demand was up 5% in the first half — coupled with stable global fleet growth of 1.8% has helped improve the fundamental demand-supply balance considerably, according to BIMCO, quoting Containers Trades Statistics.
By mid-August, a total of 306,824 teu of boxships had already been scrapped this year, which is in line with BIMCO’s forecast of 450,000 teu for 2017. This means the second half will see continued fleet growth, reduced scrapping and weaker demand versus the first half.
BIMCO adds that the remaining four and a half months will see increased ultra large container capacity coming online, with the orderbook showing 31 vessels of more than 10,000 teu, of which 11 are more than 20,000 teu. BIMCO thinks 25 such vessels will be delivered.
“BIMCO sees 2015/2016 as the real low point of the present crisis and 2017 is a step in the right direction for the industry,” it says. “Demand growth will most likely outstrip supply growth for the second year in a row. The last time we saw that was in 2010-2011.”