SeaIntel: Transpacific Contract Rates to Rise by 30 Pct?

Container carriers will highly likely be looking at increasing the Transpacific contract rate levels towards 2018, similarly to the development seen in the Europe trade.

Contract rates on Asia-Europe took about a year to recover to the rates implied by the spot market following the rate collapse in 2016. On the Transpacific, contract vs. spot misalignment is currently at 30-40% showing the potential for increases in contract season 2018-19 barring an all-out rate war, according to data provided by SeaIntel Maritime Analysis.

The container shipping industry intelligence provider created a model whereby the China Containerized Freight Index (CCFI) contract rate index was modelled around the spot rate data from the Shanghai Containerized Freight Index (SCFI).

On Asia-USWC, SeaIntel found that between 2009 and 2015, the model was 94% correlated. The major change in price formation happened in the contract market in 2016, with the contract rates dropping 30% below the levels indicated by the spot market, following the contract negotiation season in May 2016. The weakness is perpetuated into the contract season starting May 2017.

“Given that the contract market is presently 30% lower than where spot rates imply they should be, this indicates that if spot rates can be maintained, there is a potential for contract rate increase of 42% from the current levels, in order to regain the balance between spot and contract rates,” Alan Murphy, SeaIntel CEO, said.

Unless they decide to forego increases and opt for another rate war over market share, then the shippers need to prepare for a scenario of 30-40% rate increases in their contract rates for the 2018-2019 contract season on the Transpacific, SeaIntel concludes.

Share this article

Follow World Maritime News

In Depth>

Events>

<< Oct 2018 >>
MTWTFSS
1 2 3 4 5 6 7
8 9 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28
29 30 31 1 2 3 4

5th Mozambique Gas Summit & Exhibition

CWC Group in partnership with ENH and with the support and participation from MIREME and INP…

read more >

Europort 2018

From 15-17 May 2018, the 12th edition of Europort Romania willl take place in the IDU Hall in Constanta…

read more >

Offshore Energy Exhibition & Conference (OEEC)

It is unique in bringing together the oil and gas, offshore wind and marine energy industry…

read more >

Seatrade Maritime Middle East

The three days will include a thought-provoking, educational conference programme…

read more >