In the next 18 months, container shipping will see modest improvements in freight rates, according to Drewry’s latest Container Forecaster report.
However, the gains will by no means offset the significant losses that shipping lines will incur during 2016.
In a scenario that echoes the last significant collapse in rates during 2008 and 2009, the carriers have followed a similar pattern of attempts to win market share and negotiating Transpacific rates as low as US$800 and US$1800 from Asia to US East Coast.
Drewry estimates that this will collectively cost carriers some US$10 billion in lost revenue this year, despite headhaul load factors reaching 90 percent in the first quarter and spot rates improving on the core trades.
There is some evidence that action to reduce capacity on key trade lanes is helping to restore rates. The report cites the G6 Alliance lines’ action to take a loop out of the Asia-Europe trade as a positive move, along with the economies of scale generated by the new shipping alliances.
The Asia-South America trades have also seen an improvement in spot rates from a 2016 low of US$100 to more than US$2500 per box in the last month.
In other developments, Drewry also forecast that 450,000 TEU of containership capacity will be scrapped in 2016, helping re-balance supply and demand in the sector. Estimates are that more than 150 old and medium-sized box ships will be taken out of service or lay-up and scrapped in this calendar year.
In light of Hanjin Shipping’s financial collapse, it is not yet clear what impact this will have on the supply side of the global container shipping market. There have been suggestions that Hyundai Merchant Marine is interested taking on some of Hanjin’s fleet, but to date there are no details on the type of vessels they will acquire or how many.
G6 Alliance consists
- Hyundai Merchant Marine
- Mitsui O.S.K. Lines
- Nippon Yusen Kaisha
- Orient Overseas Container Line