Soft demand pushes sea spot rates to ‘minimum sustainable level’

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ONE Machinec Nansha Port China Source ONE

Photo: ONE

The latest report from Maritime Strategies International (MSI) says weak demand in three major ocean trades combined with an expected flood of new tonnage will help push interest rates down.

and ONE CEO Jeremy Nixon said today: [Q1 23] is significantly weaker than in the first calendar quarters of the last two years. “

However, this was not unexpected “as the Covid 2022 recovery cycle has resulted in a strong restocking program for consumer goods.”

Nixon believes there have been excessive adjustments affecting sales and inventory levels, but ONE doesn’t expect any signs of a recovery until June or July.

MSI’s report described spot rates as stable, albeit at “sustainable minimums”, but contract terms are still in negotiations in many cases, with “room for further declines in terms of contracted fares”. there is”.

Meanwhile, Drewry’s WCI Composite Index fell 2% week-on-week to $1,740.26 per 40 feet, down 78% from the same week last year.

Fares from Shanghai to Rotterdam and Los Angeles have fallen by 1% and 2% respectively, and fares from Rotterdam to New York have also fallen by 2%.

Xeneta’s position on the settlement of the contract is brutal and the shipping industry “It endured a tough time in April,” and long-term interest rates fell 10.6%.

“Tolls were reduced across the board, with trade lanes in all regions decreasing month-over-month, with many newly negotiated contracts at prices reflecting low market demand and high capacity,” Xeneta said. added.

The XSI shows interest rates on all trades have fallen 13.6% this year, adding CEO Patrik Berglund. “This is the eighth consecutive month of declines, over 10%, and one of the most notable.

“The meager 0.5% drop in March was somewhat misleading. It was basically the calm before the storm as we waited for new contracts with significantly lower prices to come into force in April. We can now see the dramatic impact.”

Berglund believes carriers are “in a pinch” as demand is hit by economic and geopolitical factors and shippers “take the lead” during negotiations.

“To demonstrate the significant shift in market sentiment here, they [contract rates] An increase of 118.5% from April 2021 to April 2022. So given the still weak fundamentals, year-over-year growth is unlikely to sustain for much longer. “We are very likely to see further declines,” he said.

US imports fell 1.5% month-on-month, the smallest of all indices, according to Xeneta XSI. But Berglund says: “But with May 1 approaching, when many new contracts come into effect, this small change could overshadow the reality of true long-term deals.”

European imports recorded their biggest ever decline and long-term interest rates fell 19.5% month-on-month, according to Xeneta. Exports outperformed slightly and the sub-index he fell 15.8%.



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