SHIPPERS and forwarders have expressed
confusion over the timing and transparency of new charges implemented by
container shipping lines as they switch to low-sulphur marine fuels and
pass on higher costs to customers in the run up to the International
Maritime Organization's (IMO) new sulphur cap that goes into effect on
January 1, according to FreightWaves.
Shippers are also concerned that carriers might raise the fuel component of freight to offset bearish spot rates.
"As January 2020 looms, there is anecdotal evidence that shippers will
bear increased bunker components of freight once the industry switches
to cleaner fuels," a report from Maritime Strategies International (MSI) was cited as saying in a report by American Shipper.
"This is admittedly clearer on the transpacific trade, where the
prevalence of annual contract arrangements provides better visibility
than on other trade lanes including Asia-Europe, where annual contracts
are less extensively used by shippers and forwarders."
Following recent spot rates losses on the main east-west tradelanes,
analysts believe that further rate weakness is likely, even though it's
anticipated that more sailings will be voided in the coming weeks. Some
capacity also will be withdrawn as carriers equip vessels with scrubbers
to avoid paying premiums for low sulphur fuels.
"In the most recent Shanghai Containerised Freight Index assessment, Asia-north Europe spot rates fell to US$593 per TEU and
Asia-Mediterranean rates to $742/TEU, leaving north Europe rates 19 per
cent lower than in 2018 and Mediterranean rates three per cent lower,"
said MSI.
CMA CGM plans to lower its published Asia-north Europe rates from mid-October
by $200 per TEU, and other shipping lines are expected to also offer
discounts.
Transpacific spot rates also fell during September after a brief uptick
in late August. "Rates on both US west coast and US east coast trades
sit 30-40 per cent lower on an annual basis," said MSI. "Carriers have
responded with additional blanked sailings, with the 2M alliance
partners the latest to cut capacity."
As a result, MSI's near-term outlook for spot rates on the major
Asia-Europe and transpacific trades "remains weak", with the impact of
significant blanked sailings considered "a key variable in the next
several months".
MSI anticipates average Asia-Europe spot rates of will be $700 per TEU
in November, however, an early lunar new year could boost rates towards
the end of the fourth quarter.
On the transpacific trade, the picture is more complex due to the
"confusing array of different drivers", including front-loading, new
tariffs, old tariffs, seasonal patterns, inventory holdings and the
lunar new year.
"Looking at the bigger picture, our view remains much the same," said
the analyst. "Volume growth at the end of 2019 will be negative and
likely significantly so to the US west coast."
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