Drewry: Box Shipping Rates Fall as East-West Price War Rages On

Image Courtesy: MSC

As the price war between container shipping companies persists, contract rates in the major East-West trade routes are expected to see at least a 30 percent decrease for new contracts starting from the second quarter, shipping consultancy Drewry said.

“The price war between carriers in the container shipping market continues and this is, for now, resulting in substantial reductions in contract rates for exporters and importers buying under contract,” said Philip Damas, head of the logistics practice of Drewry.

The number of companies in the Drewry benchmarking club has doubled in the year to May, as more companies “are realising both the tactical and the ongoing management value of benchmarking both costs and carrier service features,” Damas added.

While exporters and importers are enjoying big reductions in their ocean procurement costs this year, the next trend for shippers could be how to identify and work more with carriers who can maintain reliable service levels despite their revenue pressures and the risk of carrier or alliance service instability, according to Drewry.

Between February and May, Ocean freight rates for cargo moving under contracts on the major East-West trade routes fell by another 18%, while the average Transpacific and Asia-Europe contract freight rate declined by 29% in the year to May, as shippers secured big cuts in Asia-Europe annual contract rates and considerable reductions in their transpacific rates effective from May.

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