Biting carriers

Container race

Container carriers adjust upward freight rates. Thus, the largest freight carrier Maersk Line since 17th of May, 2010 raised the rates in the Asia-European direction, and since1st of July - in transatlantic direction. And transportation in the last direction  is very important. As Maersk explains, the state of freight rate in transatlantic direction still leaves much to be desired, which is now exacerbated by the shortage of containers. "The situation remains volatile in the long prospective" – the company reports.

Other carriers also do not waste their time, in particular, Orient Overseas Container Line (OOCL) also increases rates in transatlantic direction from July 1st. Other carriers also take similar actions, including the Russian company Fesco.

Indeed, following the results of four months largest ports in the world have demonstrated an impressive growth of container throughput in comparison with the same period year earlier. In particular, the container throughput of port of Singapore in January-April 2010 grew by 14% - up to 9.245 million TEUs, Hong Kong by 14.8% - up to 7.296 million TEUs, Long Beach by 16.6% - up to 485 to 1.75 million TEUs, Los Angeles by 8.96% - to 2.244.000 TEUs.

Russian container terminals do not also fall behind: container throughput of Big Port of St. Petersburg increased by 44% - to 550.5 thousand TEUs, NUTEP by 53.1% - to almost 50 thousand TEUs, Vladivostok Container Terminal increased by 51% - 371 to 108 thousand TEUs.
With this growth of container traffic increase of freight rates seems quite expected.

Dmitry Baranov, leading expert of UK Finam Management reported to PortNews IAA, the cost of freight in container traffic could grow even more due to increased transshipment volume, but, nevertheless, during the summer container freight rates may fall briefly depending on the situation in global economy.

Raw materials slipping through fingers
Freight Cost Index Baltic Dry, reflecting changes in the value of the marine transportation of raw materials: metal, iron ore, coal and grain from the end of April 2010 shows a sharp increase. Thus, in the period from 26 April to 28 May, it rose by 35% - up to 4078 points.

Its growth can be attributed to the desire of carriers to increase revenues from the growing demand for raw materials from developing Asian economies systems.

According to Dmitry Baranov, there are two most likely explanation for a sharp rise in the index. "First – summer is coming, and the onset of" high "season in transportation in the Northern Hemisphere, where the Company hopes to improve its financial results compared to 2009. And the second factor may be the desire of carriers to repeat the steps of mining companies, who considerably raised the price on coal and ore for metallurgical "- expert believes. He predicts, during the summer Baltic Dry Index is unlikely to fall below the border in 4000-4400 points.

At the same time, a number of respondents interviewed by PortNews IAA still do not see fundamental reasons for the high freight costs for raw goods. As Ragulina Sophia, senior analyst "UK" Everest Asset Management reported to PortNews IAA, in particular the demand for the metal in the world market started to fall since the beginning of May, 2010 contributed to t his decline in steel prices in China in mid-April associated with the adoption of PRC Government measures to curb the property market. "Summer is traditionally characterized by low demand for the metal, and can not wait for growth earlier than the autumn", - experts predict.

The accumulation of inventories of raw materials may also put pressure on the price dynamics of the freight. In addition, recent macroeconomic statistics show slowing economic growth in China, where the index of business activity in the manufacturing sector declined in May 2010 to 53,9 points against 55,7 points a month earlier, with the figure was slightly below the projected analysts value at 54 points.