Just a few weeks ago, we were looking at significant price rises in the cost of international refrigerated container shipping and predicting more to come. But there is nothing as certain as uncertainty.
Things have been turned on their heads in recent days and this is having a significant knock-on effect on rates. Some of the shipping lines did not raise rates recently, when many of the others did, and now many carriers are price-cutting to remain competitive and are aggressively targeting new customers.
Additionally, the capacity crisis that hit key trade routes over the past six months is coming to an end, as volumes ease and both new-build and formerly mothballed ships are introduced. In fact, recent tonnage increases on the global market represent a year-on-year overall fleet increase of 9%.
There is some concern, however, that the industry could have entered a cycle in which rates and capacity availability veer from one extreme to the other. If rates start dropping too quickly, carriers could start removing capacity again and we could go back to the capacity shortage situation we had before. All of this could have a destabilising effect on shipping lines, threatening their long-term financial recovery. It is going to be a fascinating few months.
Shipping reliability deteriorated in Q4 2009, with just 53% (compared with an average of 60% for the previous three quarters) of the thousands of ships tracked arriving as scheduled. It seems that shippers were hit with a double blow of having to pay higher rates and getting a worse standard of service.
All of the above ambiguity and confusion means we would advise anyone who has to import or export to ensure they are working with an experienced freight forwarder, who can insulate them from as much of this uncertainty as possible.
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