Drewry: Carriers Getting Busier on Asia-Middle East Route

Image Courtesy: MSC

Spot rates in the Asia to Middle East market are seeing the most traction as container shipments on the route improved by 1.6% year-on-year in May, according to shipping consultancy Drewry.

Although volumes registered in the first five months of 2017 were down by 2.6% to 1.3 million TEU, freight rates were on the up as westbound shipments improve from Asia to the Middle East and in particular to South Asia. Drewry said that prices in both lanes “should at the very least hold firm over the coming months.”

Despite the lacklustre start to the year, annual trade growth could rebound back in 2017, by potentially as much as 3%.

The Asia to South Asia market continues to expand. The latest Container Trades Statistics (CTS) data puts westbound volumes up by 6.4% after five months, following a massive 16% jump in May. It is very possible that demand could rise by as much as 7% this year to surpass the 2016 growth rate of 4.9%.

“There will inevitably be some seasonal drop-off in cargoes in the third quarter in comparison to the second quarter but, with both Ocean and THE now including Asia to Middle East in their vessel-sharing agreements, an opportunity exists for a more co-ordinated approach to balance trade-level supply with demand,” Drewry said.

“Spot rates on the Asia to Middle East trade have been somewhat erratic with large monthly gains quickly snuffed out.”

That was the case in May when Shanghai to Jebel Ali 40ft spot rates shed USD 600 to wipe out most of April’s hike. Spot rates on the same corridor then spiked again in June to reach USD 1,920/40ft. Ignoring the volatility, rates have trended upwards for a year and June’s benchmark was double that of the same month last year.

Freight rates on the Asia to South Asia tradelane are also trending upwards, although they lack the wild swings of the Middle East, Drewry informed. The benchmark rate for Shanghai to Nhava Sheva hit a 30-month high in June, gaining over USD 200 in a month to USD 1,290/40ft. Again, this is more than double the price of the same one year ago.

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