Ocean freight contract negotiations for the China Main – North Europe corridor are moving along. Delays in the negotiations were felt late last year and early this year as BCOs sat cautiously back to see how the market would develop. With the market seemingly recovering after a rally in Q4 2016, carriers still remain more in the driver’s seat. The much anticipated Chinese New year did not do too much to crash prices significantly. Negotiations are now on their way or coming to a conclusion for Asia-Europe. Long-term contract data continues to populate the Xeneta platform.

Shipping Rates for June 2017 +64% YoY

China Main ports – N.Europe Main ports | 40 ft | Long-term Contracts

If we slice out the data for long-term contracts negotiated in the past 3 months only, the increase on the market average price comparing Mid-June 2016 to Mid-June 2017 is telling.

Market Average Price

June 2016 – June 2017 (contracted in the past 3 months ONLY)= +64%

The future long-term rates rates data for June 2017 on this corridor is based on over 1500 contracted rates from global large-volume shippers who have signed long-term contracts with suppliers in the past 3 months. We receive daily updates from our customers and will have more data points as more and more negotiations conclude this month.

Contract negotiations for North American companies will soon begin and the Trans-pacific will be in the spotlight.

As we have mentioned, although the market seems on a recovery path, it is still unpredictable for a number of reasons:

Demand is still low, though there are reports that demand is increasing. I am not too sure where to place my bet yet. In any case, one thing that is for sure is that economic and political situations affecting demand are currently unpredictable.

Overcapacity – none has been removed, just shuffled. Some megas have been postponed, others are still entering an already crowded market.

New alliances starting in April. How will service be affected with them competing on similar corridors? Will it become a price war?

Capacity crunch scaring some to air freight. Is that sustainable?

Source: Xeneta (https://www.xeneta.com/blog/xeneta-shipping-rates-china-n.europe-long-term-contract-values-64-yoy-mid-june-sailings)