Container shipping lines earned $42 less per TEU in 2016 - The container shipping lines received an average rate 7% (42 USD) lower in 2016 than in 2015, if they operated in the spot market on all Shanghai Containerized Freight Index (SCFI) trade routes.

This has primarily been due to the devastating low rates received in the first half of 2016, as the average rate received in H2 2016 was 22% higher than the rate received in H2 2015.

The freight rates managed to gain momentum through second half of 2016, due to measures taken from the shipping lines in terms of network optimisation, scrapping and more careful deployment around the peak season.

As the freight rates increased through second half of 2016, 2/3 of the trades on the SCFI closed 2016 at a higher rate than in 2015 and three trade routes hit the highest USD per TEU for a week 52 in more than five years, those where trades from Shanghai to Santos, Durban and Australia/New Zealand.

China Containerised Freight Index (CCFI) reflecting China’s nationwide export of containers, is showing a 19% drop from 2015 to 2016. The short-lived spikes in spot rates during H2 2016, is not included in the CCFI compared to the SCFI and thereby the CCFI achieves a higher negative growth in 2016.

The CCFI includes both spot and long-term rates based on the actual transactions within a two weeks periods, while the SCFI focuses on the average spot booking price for one week. By that, the CCFI reflects the real progress in container shipping rates on a short-term basis. Thereby, the CCFI convey the current tendency in the container freight development and the SCFI indicate the current market development.

Furthermore, the SCFI concentrates on export containers from Shanghai Port only, while the CCFI covers the 10 major ports in China.

BIMCO’s Chief Shipping Analyst Peter Sand comments:

Despite the average rate for 2016 is lower than 2015, 2016 might stand out for something positive, where the container shipping lines took some of the measures needed to adapt to the new normal, where the growth in demand is equal to the GDP.

The container shipping lines achieved a lower growth rate in supply higher than the demand growth for the first time since 2010, by using the tools they had at hand and consolidated, scrapped and postponed deliveries.

If the Trade-to-GDP-Multiplier stays at the current level and the International Monetary Fund is correct with their projection, the container shipping industry will be status quo in 2017 and the freight rates will most likely stay at the same level as last half of 2016. However, the container shipping lines will increasingly focus on reaping the benefits of consolidation and we will most certainly see their profits go up.

US earnings are the main driver for a lower average rate

The container shipping lines operating from Shanghai to Europe earned 66.56 USD more per TEU transported in 2016 compared to 2015. The average freight rate for Europe in 2016 was thereby the only of the major trade routes to surpass 2015 level.

For the US East Coast bound containers from Shanghai, the container shipping lines earned an average of 1,051.5 USD less per transported FEU in 2016 compared to 2015. It is the biggest decline in USD for any of the trades on the SCFI and as it weighs 20% in the index, similar to Europe, it is the main driver for a lower average freight rate in 2016 compared to 2015. For the containers exported to the US West Coast, the container shipping lines earned an average of 223.5 USD less per FEU in 2016.

Container freights rates in second half of 2016 does not revive intra-Asia

Container shipping lines operating trade routes from Shanghai to South Korea, Taiwan, Hong Kong and Singapore all achieved a lower average rate for 2016 compared to 2015. The four trades did not experience similar increases in the rates, as the main trades during H2 2016 and remained on par with the poor H1 2016 level.

With the mergers and newly established alliances entering into force and the supply side handled with care, the container shipping industry will hopefully see better profits and fleet utilisation.

Our most recent shipping market overview and outlook reports on related issues:

The shipping market in 2016 and looking forward

  • demolition activity slowly but steadily grows…yet again
  • container shipping: Severe overcapacity in the market and recently agreed contract rates
  • lowest level of newbuilding contracts in 20 years
  • substantial demolition of panamax containerships.

Source: Peter Sand, Chief Shipping Analyst; BIMCO

BIFA - Industry News

Heathrow confirms planning application

The consultation will run from April through to June ensuring that communities can review and feedback. Heathrow will be writing to local authorities in the coming weeks with more information,...

UPDATE: Importers of HRFNAO from outside the EU must use TRACES NT from tomorrow

This means you will not be able to raise a new CED in TRACES Classic for HRFNAO and must instead complete the new CHED-D in TRACES NT - please read the below additional guidance before you do this....

Government launches consultation to introduce Freeports

In doing so, the government wants freeports to generate employment opportunities to the benefit of some of our most deprived communities around the UK. The government has the following objectives...

Corvid 19 (Coronavirus)

At BIFA we are receiving a significant number of enquiries regarding Corvid 19, and its impact on supply chains. We have received many requests for information regarding the virus itself. Please...

Moveable barrier to keep Kent’s road network moving

government and Highways England develop long-term solution to handle traffic disruption in Kent new moveable barrier could be deployed using a specialist vehicle within hours less disruption than...

Importers of HRFNAO from outside the EU must use TRACES NT from next week

As you may recall, while the regulations came in on 14th December 2019, the switch from pre-notifying on TRACES Classic to TRACES NT was delayed. Information received from Defra advises that the EU...

Multimodal 2020: Don't delay register today

Asked why individuals should register now, Rob Jervis, Logistics Portfolio Director, Clarion Events said: “Registration in advance will enable anyone planning to attend Multimodal 2020 to avoid the...

HS2 must deliver its promises on rail freight

HS2 has the potential to deliver significant benefits for rail freight by releasing capacity for new services on the existing network. With each freight train producing 76% less CO2 than the...

AAI Group Login

Cookies are small text files downloaded to your computer each time you visit a website. When you return to websites, or you visit websites using the same cookies, they accept these cookies and therefore your computer or mobile device.