Analysts expect Trans-Pacific rate rebound
Some analysts and container lines are expecting a rebound in trans-Pacific spot rates after prices hit their lowest point in 23 months this week, Journal of Commerce reports. Several carriers have announced planned rate increases at the start of January, as lines attempt to take advantage of cargo spike before factories in Asia close for Chinese New Year celebrations.
Prospects for carriers operating the trans-Pacific were much better than on Asia-Europe “given supply adjustments” and the “not so bad” demand outlook from the U.S., said Rahul Kapoor, a Singapore-based shipping analyst with broker RS Platou.
“We see a potential for inventory restocking there, albeit at a more gradual pace than in 2010,” he said. “We expect rates to recover on expected improvement in demand ahead of the Lunar New Year, but capacity adjustments would be the key to the extent of recovery.”
Spot rates on major trans-Pacific lanes are running close to 30 percent lower than a year ago. But carriers have speeded the idling or removal of capacity from the trade, and liner and shipper sources confirm rollovers were evident in northern China on certain sailings during much of November.
Thomas Knudsen, Maersk Line CEO in the Asia-Pacific, said trans-Pacific loadings had been busy in recent weeks as carriers withdrew capacity. He said demand would build further in anticipation of the factory shutdown for the Chinese Lunar New Year.
The official holiday runs Jan. 22-28, but after returning home to inland provinces, many workers take far longer breaks or simply do not return to their employer at all. As a result, production levels at many Chinese factories can fall for an extended period.
“It’s an early Chinese New Year, plus there is also Christmas and New Year so we expect to be busy in the coming weeks on both Asia-Europe and the Transpac,” said Knudsen.
A strong Black Friday was usually a good indicator of a forthcoming strong peak, he said. “We’re quite hopeful will have pre-Chinese New Year rush.”
A CEO for another large carrier, speaking on condition of anonymity, was also optimistic. “We’re expecting Chinese New Year to help markets from mid-December,” he said. “We didn’t see any peak pre-Golden Week (the Chinese holiday at the start of October). In fact, it was an anti-peak, but since then there has been movement upwards and it will improve.”
Kapoor pointed to U.S. retails sales in October which showed a higher than expected 0.6 percent increase, which translates into an annual growth rate of 7 percent for 2011. That should imply import growth of 8 to 9 percent.
“However, with import growth turning negative in the past quarter, we believe that retailers are drawing down inventories,” he said. If demand holds, carriers will have “a perfect platform” to push announced surcharges and gain a better bargaining position for annual contracts.
Prospects for carriers operating the trans-Pacific were much better than on Asia-Europe “given supply adjustments” and the “not so bad” demand outlook from the U.S., said Rahul Kapoor, a Singapore-based shipping analyst with broker RS Platou.
“We see a potential for inventory restocking there, albeit at a more gradual pace than in 2010,” he said. “We expect rates to recover on expected improvement in demand ahead of the Lunar New Year, but capacity adjustments would be the key to the extent of recovery.”
Spot rates on major trans-Pacific lanes are running close to 30 percent lower than a year ago. But carriers have speeded the idling or removal of capacity from the trade, and liner and shipper sources confirm rollovers were evident in northern China on certain sailings during much of November.
Thomas Knudsen, Maersk Line CEO in the Asia-Pacific, said trans-Pacific loadings had been busy in recent weeks as carriers withdrew capacity. He said demand would build further in anticipation of the factory shutdown for the Chinese Lunar New Year.
The official holiday runs Jan. 22-28, but after returning home to inland provinces, many workers take far longer breaks or simply do not return to their employer at all. As a result, production levels at many Chinese factories can fall for an extended period.
“It’s an early Chinese New Year, plus there is also Christmas and New Year so we expect to be busy in the coming weeks on both Asia-Europe and the Transpac,” said Knudsen.
A strong Black Friday was usually a good indicator of a forthcoming strong peak, he said. “We’re quite hopeful will have pre-Chinese New Year rush.”
A CEO for another large carrier, speaking on condition of anonymity, was also optimistic. “We’re expecting Chinese New Year to help markets from mid-December,” he said. “We didn’t see any peak pre-Golden Week (the Chinese holiday at the start of October). In fact, it was an anti-peak, but since then there has been movement upwards and it will improve.”
Kapoor pointed to U.S. retails sales in October which showed a higher than expected 0.6 percent increase, which translates into an annual growth rate of 7 percent for 2011. That should imply import growth of 8 to 9 percent.
“However, with import growth turning negative in the past quarter, we believe that retailers are drawing down inventories,” he said. If demand holds, carriers will have “a perfect platform” to push announced surcharges and gain a better bargaining position for annual contracts.
