Container shipping’s “rate uncertainty” has impact on futures market

The analysis comes as carriers and shippers prepare for new contract negotiations.

By ·

The uncertainty over the level of container freight rates in the next few months has severely disrupted trading on the freight futures market, said analysts at the Paris-based consultancy, Alphaliner.

Volumes traded at the Shanghai Shipping Freight Exchange (SSEFC), the most active market for container freight futures, crashed to their lowest levels since the trading of container freight futures started at the Chinese exchange on 28 June 2011.

The analysis comes as carriers and shippers prepare for new contract negotiations. A general rate increase (GRI) is anticipated by both parties.

Average daily volumes traded from 2 to 8 February fell to only 15,000 twenty-foot equivalent unit (TEU) compared to the 169,000 teu average recorded for January. Forward freight rates hit their 5 percent daily cap on four consecutive trading days during that period as the market struggled to find an equilibrium following the surprise announcements by shipping lines of rate increases ranging from $400-900/teu on the Far East-Europe
trade and $800/forty-foot equivalent unit (feu) on the Transpacific trade. On 3 February, only 74 teu was traded on all Shanghai to Europe future freight contracts as market players refrained from selling forward rates due to the market uncertainty.

“Trading volumes will remain highly volatile in the next few weeks, as forward rates are expected to see wild swings as the market continues to digest the carriers’ GRI announcements,” said Alphaliner’s commercial director, Stephen Fletcher,

Forward rates to North Europe have seen a steep increase, with April contracts currently trading at $1,078/teu, rising by 54 percent from a low of $700/teu in January.

“Despite this, the carriers’ bid to raise rates is still far from assured,” said Fletcher.

About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Article Topics

All Topics
Latest Whitepaper
Case Study: LEAN Yields Big Results
Every day, companies across a wide range of industries use LEAN in their supply chains, warehouses and distribution centers, finance departments, and customer service centers, among other areas. LEAN practices improve safety, quality, and productivity by extracting cost and waste from all facets of an operation – from the procurement of raw materials to the shipment of finished goods.
Download Today!
From the October 2016 Issue
Over the past decade we’ve seen a major trend in regards to safety regulations for freight transport within the United States as well as for import and export shippers—that trend is the “international­ization” of rules and regulations.
European Logistics Update: Post-Brexit U.K. moving ahead, but in which direction?
Badcock Home Furniture &more: Out with paper, in with Cloud TMS
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
How API Technology Connects the Transportation Economy
Dynamic decision making is made possible through accurate, actionable data. When combined with progress in data science and the Internet of Things, technology companies that add value to direct-to-carrier APIs and combine them with high-power data analytics will create new concepts for the information economy.
Register Today!
Motor Carrier Regulations Update: Caught in a Trap
The fed is hitting truckers with a barrage of costly regulations in an era of scant profits....
25th Annual Masters of Logistics
Indecision revolving around three complex supply chain elements—transportation, technology and...

2016 Quest for Quality: Winners Take the Spotlight
Which carriers, third-party logistics providers and U.S. ports have crossed the service-excellence...
Regional ports concentrate on growth and connectivity
With the Panama Canal expansion complete, ocean cargo gateways in the Caribbean are investing to...