China shippers cannot forecast their transport costs

Shippers are seeing record increases in container freight rates as part of another swing in an increasingly volatile container shipping spot market, reports Xinhua.
 
"The extreme volatility of the spot container shipping market is an industry issue not just for shippers, who cannot forecast their transport costs or their products' total landed costs, but also for container shipping companies and forwarders," said Philip Damas, director of Drewry Supply Chain Advisors.

In the past year, Drewry's regional container freight rate index for European imports plunged from US$3,169 per FEU in July 2008 to a low point of $1,071 in March, before shooting up to $1,812 in July 2009, according to Drewry's latest Container Freight Rate Insight report, which gathers "all-in" spot freight rates globally on 312 trade lanes.
Similarly, in the past year, Drewry's global freight rate index for container shipping has fluctuated between a maximum of $2,727 per FEU in July 2008 and a minimum of $1,536 in May 2009.

Recently, on the Far East-Europe route, most all-in spot rates increased by more than 50 per cent between May and July, although from a very low base, Drewry's said.

"This volatility looks even more acute than that of the stock market, and makes it extremely difficult for shippers to know what a fair price is in today's spot market," Mr Damas said.

The removal of capacity by carriers in the Asia-to-Europe trade has led to capacity shortages, roll-overs and a complete shift in the bargaining power of spot shippers and carriers on this route. Carriers are exploiting the potential to negotiate rate increases in return for peak-season capacity guarantees.

Between May and July, the two regional price indices for America (US import rates and US export rates) stabilised overall after a period of decline, and Drewry recorded large increases in transpacific eastbound spot freight rates in early August.

(Source: Transport Weekly)