Shipping costs across global trades rose in November, as a result of the enforcement of GRIs on several Asia-origin trades, according to market analyst Drewry.
But how sustainable will these increases prove to be with peak season now fully concluded and what does this mean for shipping costs in 2014?
Drewry's Global Freight Rate Index, a weighted average across all main trades excluding Intra-Asia, recovered following two consecutive months of decline, gaining 10 percent over October to US$1,957 per FEU.
The index is published in Drewry's Container Freight Rate Insight along with shipping costs on over 600 trade lanes at www.drewry.co.uk/cfri.
The Global Freight Rate Index was buoyed by rising rates on Asian imports into Europe, South Asia, the Middle East, South America, Africa and Oceania.
The most significant rise was recorded on trades from Asia to South America where 10 months of consecutive falls in pricing were reversed by a doubling in rates. For instance, rates from Yantian to Santos soared 115 percent to $4,180 FEU.
Meanwhile, westbound Asia-Europe spot rates more than doubled in the first week of November, according to the World Container Index assessed by Drewry.
But pricing eroded over subsequent weeks, so that by the second week of December over half the gains of the GRI had been lost. The net effect was to lift average spot rates in November by 50 percent.
But the advance in the Global Freight Rate Index was held back by weaker rates on the westbound transpacific, eastbound Asia-Europe, eastbound transatlantic and African exports.
Eastbound transpacific rates failed to respond to a mid-November GRI.
By the second week of December, all gains achieved through the GRI had been lost through a subsequent decline in rates.
Meanwhile, intra-Asia rates, which are not included in Drewry's Global Freight Rate Index, remained largely unchanged at an aggregate level.
Drewry's Intra-Asia Freight Rate Index gained one percent in November to remain near an all-time low of $947 per FEU. Container shipping remains plagued by too much capacity chasing too little demand.
But at a trade route level, carriers have been relatively successful in matching supply with traffic growth, helped by some improvement in overall demand levels. However, they have generally failed to turn this advantage into stronger pricing.
There is an increasing disconnect between market fundamentals and freight rates. Despite respectable load factors, carriers are struggling to achieve sustainable rate rises on the spot market and this is strengthening cargo owners' hand in contract rate negotiations.
Carriers continue to be spooked by the spectre of imminent big ship deliveries and so are fighting to hold onto market share. This market behaviour will put further pressure on freight rates through 2014.
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