Due to the devastating low rates in the first half of 2016, container shipping lines earned an average of 7% less, than in 2015 on all Shanghai Containerized Freight Index (SCFI) trade routes, according to BIMCO.
The freight rates managed to gain momentum through second half of 2016, and were 22% higher than the rates received in the same period a year earlier, due to measures taken from the shipping lines in terms of network optimisation, scrapping and more careful deployment around the peak season.
As the freight rates increased, two thirds of the trades on the SCFI closed 2016 at a higher rate than in 2015 and three trade routes hit the highest USD per TEU for a week 52 in more than five years, including trades from Shanghai to Santos, Durban and Australia/New Zealand.
BIMCO said that the China Containerised Freight Index (CCFI), reflecting China’s nationwide export of containers, is showing a 19% drop from 2015 to 2016.
“Despite the average rate for 2016 is lower than 2015, 2016 might stand out for something positive, where the container shipping lines took some of the measures needed to adapt to the new normal, where the growth in demand is equal to the GDP,” Peter Sand, BIMCO’s Chief Shipping Analyst, said.
If the Trade-to-GDP-Multiplier stays at the current level and the International Monetary Fund is correct with their projection, the container shipping industry will be status quo in 2017 and the freight rates will most likely stay at the same level as last half of 2016.
However, Sand said that the container shipping lines will increasingly focus on reaping the benefits of consolidation and “we will most certainly see their profits go up.”