China Market update / Rate Reductions

In speaking to a number of ship lines yesterday and today we have learnt forward bookings in regard cargo from China is down (in one conversation 20% down on last year was mentioned). This of course means space is starting to free up. We also have learnt that most carriers have cleared all backlogs (except MSC). MSC have deployed two extra “loaders” to help clear their large backlog of containers sitting in Singapore and Malaysia. It should be noted that it is going to take MSC some time to clear their back log which I understand to be in the region of 6,000 containers (some of which have been sitting for 3 months!).

Why the turn around

  • delayed / poor communication from the ship lines themselves suggests reducing back log volumes has been a work in progress for sometime. This type event does not not happen overnight. 
  • Reducing back log volumes suggests lower shipment volumes. We were advised Auckland’s 12 week lock-down is having an impact. Auckland retail stores cannot move expected volumes because of the shut down resulting in warehouses being full with stock. Therefore international orders are being delayed at best, cancelled at worst. It is doubtful the delayed orders will arrive (or be required) prior Christmas. 
  • Current China power crises has delayed or prevented the manufacture of a large amount of cargo.
  • The welcome addition of new carriers to market
  1. Zim Lines
  2. Matsons
  3. TS Lines

The market entry of the above three players has positively affected the market. The extra capacity introduced (in particular TS Lines) has been most welcome. 

In consideration of the above a number of carriers have announced a REDUCTION in freight rates. Expected reductions are in the region of USD 200.00 – USD 500.00 per 20′ CTR (double this for a 40′ CTR). We expect all lines to act in a similar manner going forward. 

Please note – this update is specific to the China market only. To date the outlook in other trade lanes remains difficult.

Stellar will be passing on the reductions as they come into effect. 

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