The positive outlook for ocean freight rates is good news for local consolidators who are cautiously optimistic for the year ahead.
According to Lee Viljoen, ocean freight general manager for neutral consolidator CFR Freight, rates have reached a reasonable and satisfactory level that will help to boost the local consolidation industry.
“Rates have been under pressure since the 2008 global economic downturn, but container trade has seen major recovery in the past year and is back on track,” said Viljoen.
It is a sentiment shared by shipping consultancy Drewry. “We believe the industry is moving in the right direction,” said Drewry’s research manager Simon Heaney. Last year he predicted an operating profit for the year of $6bn. “And that sum is expected to rise this year,” he said.
According to Viljoen, this is an important development for the consolidation sector which has been under pressure due to lower rates. With consolidation working off carrier rates, low or competitive rates directly affect the sector’s break-even resulting in less volume being shipped.
While the South African consolidations market has been extremely resilient in the past few years, the turn-around in the container trade is being welcomed across the board. Rates are expected to remain firm throughout 2018 with further increases predicted.
“Recovery in world container trade has been surprising – and if we look at it in hindsight we can appreciate the appalling state of world trade over past years,” said Heaney. He said expectations for the second half of 2018 were also positive with higher volumes predicted.
Low freight rates directly affect the sector’s breakeven resulting in less volume being shipped. – Lee Viljoen
