Fares Expected to Rise as Contract Season Ends and Labor Issues Continue

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According to HSBC, the Shanghai Container Freight Index (SCFI) experienced a slight week-on-week increase of 0.3% as carriers look to strengthen spot rates at the end of Trans-Pacific contract negotiations, and will continue to grow for the foreseeable future. shows an upward trend in freight rates. global research.

Several shipping lines have announced general rate increases for trans-Pacific headhaul routes effective May 1st. However, the sustainability of these rates will depend on capacity discipline and delivery of the demand recovery expected in the second half of the year, he said.

Despite the International Union of Ports and Warehouses (ILWU) announcing a tentative agreement with the Pacific Maritime Association (PMA) on key issues, labor issues in US West Coast ports continue to create uncertainty. HSBC says the continued lack of a final agreement after July 2022 will force cargo owners to sign contracts above spot rates to ensure reliable service during a potential recovery in demand. is expected to be encouraged.

“While this is somewhat positive, we believe that the lack of a final agreement beyond the July 2022 expiry of the contract remains an overhang. We believe that we will be able to secure our ability to sign contracts above the spot rate level and ensure service reliability when demand is likely to recover.

The report notes that Taiwanese shipping company Evergreen has reported contract rates above spot levels, but committed volumes are low.

Meanwhile, the dry bulk shipping sector is “waiting for a recovery in demand”. Chinese steel and cement output rose in March, boosted by hopes of a recovery in demand. But the real estate industry is showing signs of weakness, with new floor space starting to fall 29% year-over-year. HSBC said his 7% dry bulk TCE rate, which is a decade low, is unlikely to stay at current levels for long and could trigger a spike in freight rates if demand rises.

The HSBC report found mixed rate performance for dry bulk and tanker vessels as the Baltic Dry Index and Baltic Dirty Tanker Index declined week by week and the Baltic Clean Tanker Index rose 8%. It is pointed out that

HSBC’s Global Freight Monitor report is available here.

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