Friday, May 15, 2009

Update- Rates did not go up

Back on March 20, 2009, in a post called Ocean Rates will not go up this is what I said regarding ocean rates increasing on the Transpacific Trade (which is basically Asia to U.S., sorry Canadians)

Various CEO's of international container companies keep saying there is a need to "restore market discipline", meaning they need to quit cutting rates.

What these guys don't understand is, you can't restore market discipline by saying "don't do that". You restore market discipline by getting the supply more closely matched with demand.
So shippers, or consignees, you don't need to worry too much about the rates going up for some time. I have seen it happen too often - everyone gets together, agrees they will behave themselves, and it all falls apart as soon as there is no cargo.

Now, having said that, if you want the rock bottom rates, you will probably only get a short term contract. If you want a contract valid for 12 months, the rates will be less than last year, but not crazy cheap like they are now.

And, how did it go for contract rates this year?

According to Maersk

Maersk Line chief executive Eivind Kolding described the rate reductions that ocean carriers have been forced to accept for transpacific eastbound cargo as “quite substantial”.

While not quantifying how much lines such as Maersk had dropped their prices, Mr Kolding indicated that reductions exceeded 10%.

The percentage drop was in double digits, he told Lloyd’s List.

And I am quite sure this is the actual rate, not the rate plus the bunker adjustment.

I suspect the decrease is even more than 10%. Maersk said they were determined to keep their market share, and MSC has been aiming to increase theirs.

Leave a comment if you know what kind of decrease was given.


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