Carriers mull new round of rate increases in May as capacity grows
2012 05 08
- Details
THE recovery of Baltic Dry Index (BDI) back to 1,000 points has brought back the confidence of a depressed global shipping industry, prompting it to impose another round of rate increases, reports Xinhua.
But this is considered as difficult option by experts in the industry, says Xinhua. In early February, the BDI slid to historic lows of 647 points, but has since recovered steadily and has come back to 1,000 points in late April. This is because of a rise in demand stimulated by the surge of grain export from South America, which has caused shortage of capacity on Atlantic lines.
After two rounds of rate increases in March and April, some carriers plans to launch another round in May. Cosco plans to levy a surcharge of US$400 per TEU on oversize cargo from Far East to South Africa since May 1. OOCL announced a rate increase of $200 for cargo from northern Europe to Asia.
The Shanghai Shipping Exchange reports that the market is taking an wait-and-see attitude towards the rate increases in May, as the previous two rounds in March and April have raised the rates on European lines to a high level.
According to Clarkson Shipping Intelligence, there will be about 20 new ships coming into service in May, suppressing the further increases in rates. In addition, it has yet to be determined whether shippers will accept a new round of rate hikes.
But concerns of further increases in May has resulted in a recent peak in the Chinese container shipping market with a rush of cargo to the docks before they are imposed with some roads connecting ports experiencing unseasonal congestion.
Continuous rate increases has pushed the rate of shipments from Shanghai to Europe from $500 to $1,700 per TEU, higher than the balance point of $1,300. This means the carriers' revenue will possibly be substantially improved, says Xinhua.
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