BIMCO reports that what started as a red-hot container market for Far East-US trades has now spread to other routes, with rates from the Far East-Brazil seeing particularly high spot rates
Using Xeneta data, BIMCO reported that on 24 January 2021, the base freight rate for a 40-ft container from the Far East to the Port of Santos reached US$9,299/FEU. Average rates for January are now 230.5% higher than they were in January 2020. Santos is the largest container port in South America, handling 4.2M TEU in 2019.
BIMCO reports that the red-hot spot market is a result of the imbalance of trade over the past year, as the first half of 2020 was marked by blanked sailings and weak demand for container shipping.
Towards the end of the year this was flipped on its head, with demand surging as consumers started spending more money on goods than services. The demand for ships has now surged, with the idle fleet falling below 250,000 TEU, less than 10% of what it was in May 2020, according to Xeneta data.
BIMCO chief shipping analyst Peter Sand said, “Seasonally, after an uptick in January, the container market usually slows down up to the Chinese New Year, with the idle fleet rising and exports from the Far East falling as manufacturing shuts down for celebrations.”
He added, “Given the current circumstances, that would offer a great opportunity to rebalance the market and get containers to where they need to be, but this year’s celebrations will be different and are unlikely to create the usual dip in exports.”
Mr Sand noted that, “Looking past the Chinese New Year, the current imbalances in the market will take many months to resolve, which will continue to support the record high spot rates. However, once this immediate crisis is resolved, freight rates will fall once more, but experiences of the past year mean that carriers may find themselves able to better manage capacity and ensure profitability.”
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