Freight rates hold on to a healthy level on the main routes according to the latest BIMCO Market Analysis Report.
Excerpts from the report follow:
Freight rates hold on to a healthy level on the main routes, while new large vessels are put to work smoothly without adding extra downside pressure to the current balance, says the report.
The positive stories continue to show themselves in the container shipping segment, with freight rates holding up well and demolition activity staying strong. In the light of the slowly developing demand side, it’s very positive that the industry deals with the supply side issues to improve the fundamentals.
Growth rates in container volumes on the main trading lanes pose a continuous challenge as they struggle to improve. On Far East to US West Coast the first half year growth number for loaded inbound boxes is just 2.1%. Not impressive, but moving upwards as compared to the development seen one year ago, where imports fell from May till December. As regards overall traffic on Far East to Europe, volumes are down by as much as 2.1% in the first six months, mirroring the difficult economic situation that is felt across Europe.
On the high volume/short haul trading lanes, intra-Asia freight rates have fared much more stably as compared to the very volatile rates development on the main long haul trading lanes to Europe, Mediterranean (Med.) and US West Coast (USWC). This improved the comprehensive index as is clear from the graph below; the index is heavy on the long haul (50% originates from Europe/Med./USWC), while the four depicted intra-Asia routes comprise only 15% of the index.
Outlook:
Regardless of the slow development of demand, freight rates have travelled from a very poor state at the end of 2011 to a comfortable level on several significant trading lanes. Bearing that in mind, BIMCO expects the peak season to become a positive surprise, with rates holding up somewhat but potentially with a sliding tendency if deployed capacity reveals itself as abundant. BIMCO continues to expect the short term focus will be on balancing the demand for new tonnage with deployed capacity. Our forecast contains an improved market balance, as the supply side is helped by strong volumes of demolished tonnage which is removing significant number of smaller vessels up to 3,000 TEU.
