Freight rates hit rock bottom

Seafreight rates have plateaued
and will start increasing across
most trades, according to Drewry
Research.
This forecast is being made despite
Drewry’s Global Index, a weighted
average across all main trades
excluding intra-Asia, falling in June,
after strengthening in the previous
month. The index lost 1% or $18 to
reach $1 245 per 40ft box.
Among North-South trades, rates
are “dismally low” on the Asia-South
Africa trade, and have been declining
since October last year, according to
the latest Drewry report.
It says demand was down 11%
during the first quarter, and ship load
factors touched the lowest figure of
68% during the first five months.
Carriers had fewer options for
raising fees during this period – with
only three advertised
rate increases during
the first six months,
according to analyst
Philip Damas.
Speaking in a webcast
fellow analyst Neil Dekker
said freight rates had
bottomed out – simply because the
carriers could not afford to continue
running at such small margins or
at a loss.
Excess capacity is being taken out
of the system in order to stabilise
and raise rates, with relatively
modern vessels being scrapped.
Carriers “gave away” an estimated
US$10 billion in revenue this year
on the major Beneficial Cargo
Owner (BCO) contracts.
“There will be an expected
bounce-back in 2017. Rates will be
higher, but calling it a recovery is
too strong,” he added.