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January 6 2020

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28 The Journal of Commerce | Januar y 6 2020 2020 Maritime ANNUAL REVIEW & OUTLOOK $570 $620 $670 $720 $770 $820 $870 $920 $970 $1,020 Mar.15 (Week 11) Mar.29 (Week 13) Apr.12 (Week 15) Apr.26 (Week 17) May.17 (Week 20) May.31 (Week 22) Jun.14 (Week 24) Jun.28 (Week 26) Jul.12 (Week 28) Jul.26 (Week 30) Aug.09 (Week 32) Aug.23 (Week 34) Sep.06 (Week 36) Sep.20 (Week 38) Oct.11 (Week 41) Oct.25 (Week 43) Nov.08 (Week 45) Nov.22 (Week 47) Dec.06 (Week 49) Shanghai to Nor th Europe Shanghai to Mediter ranean Asia–North Europe spot rate rises in December Source: Shanghai Shipping Exchange © 2019 IHS Markit Shanghai Containerized Freight Index rate per TEU +3.4% yoy -2.2% yoy ing with recession, while Italy reported almost zero economic growth in the third quarter. IHS Markit's Purchasing Managers Index (PMI) surveys show uncertainty over Brexit is placing a drag on the UK manufacturing sector, and in Germany the declining autos and auto parts market, a huge vertical that drives demand for air and ocean shipments, continues to record the steepest declines in manufacturing output of all sectors. The only silver lining was that the German decline in manufacturing output, new orders, and exports slowed in Octo- ber, indicating that the auto slow- down may have bottomed out. IHS Markit is the parent company of The Journal of Commerce. Spot prices rose through Novem- ber as capacity was withdrawn and freight all kinds (FAK) rate increases were levied by some carriers, causing the spot market to rebound strongly from its mid-October low. The restriction of capacity is likely to continue into 2020 as carriers con- tinue to take vessels out of service to clean out fuel tanks or fit them with scrubbers ahead of the Inter- national Maritime Organization's (IMO) low-sulfur fuel requirement that begins Jan. 1, 2020. Alphaliner reported the number of inactive ships undergoing scrub- ber retrofits remained high through mid-November, with a total of 65 units comprising 619,189 TEU being fitted. Short-term solutions According to Rahul Kapoor, vice president and head of research and analytics at IHS Markit's Maritime & Trade division, rates might be lifted by the removal of this capacity, but CONTAINER SPOT RATES on the Asia– Europe trade were on the rise thanks to aggressive capacity management by carriers through the fourth quar- ter, but the demand required to sustain the rising prices is still missing. As of Dec. 6, 2019, rates from Asia to North Europe had risen 3.4 percent year over year to $800 per TEU, according to the Shanghai Containerized Freight Index (SCFI), but volume growth has been slowing since May, according to data from Container Trades Statistics (CTS). Westbound Asia-Europe shipments inched up 0.7 percent year over year in October, the latest month for which figures are available, after dropping 3.4 percent in September. Through October, European contain- erized imports from Asia were up 3.8 percent compared with the same 10-month period in 2018, according to the CTS figures. Carriers are getting little support from the major European economies. Germany and the UK have been flirt- Fleeting recovery Asia-Europe rate increases likely to be short-lived amid lackluster demand By Greg Knowler

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