Shippers expected to keep annual contract A-E rate below US$1,000/TEU

Time:2015-12-07 Browse:68 Author:RISINGSUN
ANNUAL Asia-Europe contract talks appear to be fixed on a headhaul rate of US$1,000 per TEU with shippers fighting to keep it below and carriers battling to move it above.

That, at least, was one of the conclusions of Drewry in an analysis of liner strategy, entitled "Lessons in Absurd", reports Lloyd`s Loading List.

Asia-Europe carriers have suffered a near unbroken rate collapse in the last year as well as bearish peak season, which has not bolstered their position entering annual contract talks.

"All logic currently points to westbound BCO rates being fixed below $1,000 for next year ?and, in some cases, well below," noted Drewry.

Headhaul volumes on Asia-North Europe in the third quarter fell, year on year, by 7.1 per cent, resulting in an overall cargo decline in the first nine months of 2015 of 3.9 per cent, a performance exacerbated during the traditional peak season by a dip in Russian imports.

"At this rate, this trade will have shrunk by some 400,000 TEU," said Drewry. "Vessel utilisation factors, which for much of the summer had held at or above 90 per cent, deteriorated sharply to below 80 per cent in the closing weeks of the third quarter."

Despite withdrawing headhaul slots in October, rates only started to recover in early November. Yet by the end of November, westbound spot rates had again fallen to $550 per TEU, leaving contract talks at a standstill.

"Neither party is in any hurry to conclude those BCO negotiations at present," said Drewry. "Shippers believe the carriers will weaken while the latter are praying that there might be some form of end-year cargo rush to prop up rates."