Container market weekly roundup: Optimism over higher trade demand dampened by financial results

June 1 has arrived and the mood in the container industry is generally one of optimism as trade demand is higher than last year, while consolidated carriers and new alliance structures are bringing added value to the ocean part of the supply chain.

However, that optimism has been somewhat dampened by carriers’ financial results, which have not been as promising as first anticipated. Bunker costs are the main culprit.

The Platts West Coast North America IFO380 bunker assessment averaged $450/mt in May, up from around $325/mt in May 2017.

This is alongside a lower trans-Pacific eastbound annual contract average for May 2018 of $1,100/FEU compared to May 2017 averaging around $1,200/FEU. This has placed pressure on carriers to try and recover costs quicker than previously agreed in the bunker contracts with the shippers.

One solution open to the carriers has been the Emergency Bunker Surcharge, which some carriers have already announced they will use to try to mitigate their bunker exposure.

Another solution is increasing the spot box rates, which carriers have also tried. But the ongoing market share battles mean they have not managed to increase the box rates as much as might be hoped.

The North Asia to West Coast North America, PCR13, route dropped on May 1 to $1,200/FEU from $1,300/FEU before rebounding on June 1 to $1,350/FEU. The East Coast North America head-haul route, PCR5, followed a similar trend, decreasing $100 to $2,150/FEU before recovering on June 1 to $2,300/FEU.

It was the same across the Atlantic with the North Asia to Northern Europe routes PCR1 and PCR11 both increasing by $100 to $1,400/FEU on June 1.

Some carriers had issued June box rates as high as $1,800/FEU but these were reduced at the last minute to ensure their vessels would sail fully laden.

Source: Platts

Previous Next

There Is a Steady Growth in the Number of Indian Seafarers Employed: Dr. Malini V. Shankar, (IAS), Director General of Shipping

View More Videos


India Shipping and Offshore Summit

View All Albums