Contract freight rates paid by beneficial cargo owners (BCOs) to move products by container have increased for a fourth consecutive quarter according to global shipping consultancy, Drewry.
“The container shipping market has seen a sustained, radical reversal away from the previous, long deflationary trend,” said head of Drewry’s logistics practice, Philip Damas. “Not only are freight costs increasing, but rapid consolidation in the supplier base, changes in supplier behavior, and new developments in tender technology will bring real change and uncertainty to the ocean transport procurement environment.”
Actual contract rate data from the Drewry Benchmarking Club (DBC) showed that the DBC’s Contract Index had increased by 39% based on US$2 billion of ocean freight spending, while the average contract rates on two major container trade routes (Asia to North Europe and North America) had increased by a further 4% between the second and third quarter of 2017.
Drewry has reiterated its warning to BCOs to rethink their contract negotiation strategies to mitigate rate increases.
