Stronger Sentiment on Global Container Rates
published: cw 22, 2007 in Logistics & ShippingA.P. Moller – Maersk share price rose on the Danish stock exchange last week amid speculation that container freight rates are rising. An analyst’s note from the investment bank Morgan Stanley suggested that prices were hardening by around 2% on an annualised basis.
Lower freight rates over the past twelve months have savaged profits at the likes of NOL and Evergreen, but Maersk’s poor results were also due to lost market share as a result of the poor handling of the P&O-Nedlloyd acquisition.
Now however, the mood coming from the container sector is suddenly optimistic. Chinese exports are strong ahead of an expected upwards valuation of the Renminbi, and whilst trans-Pacific rates have weakened over the year, much of the slack has been taken-up by the China-Europe route. Now with fears about lower growth in the US receding, shipping companies are hardening their stance with customers during rate negotiations.
Whilst the supply of ships is still high, with around a 14% increase in capacity expected this year, demand from China continues yet higher. The background to container rates is also influenced by the strength of demand for raw materials. Bulk rates into China remain sky-high with shortage of capacity particularly in bulk-terminals.
Therefore some are looking to renewal of the container market cycle and a consequent upswing in rates over the next 18 months to two years.
Source: Transport Intelligence
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