Shippers Reeling From Hanjin Aftershocks
Xeneta’s global community of shippers is reeling from the impact of the demise of Hanjin Shipping, the world’s seventh largest containership operator.
Xeneta crowdsources shipping rate data from more than 600 major international businesses, many of whom have now been hit by stranded inventory, rising prices and—in a shock development for a sector struggling with structural overcapacity—claims of under-capacity from the remaining liners.
Oslo-based Xeneta is a global benchmarking and market intelligence platform for containerized ocean freight. Its community of shippers provide it with up-to-date information across over 17 million contracted rates, covering more than 60,000 port-to-port pairings. This gives it, and its customers looking to negotiate the best rates, an unrivaled real-time snapshot of the market.
That snapshot isn’t pleasant viewing for shippers right now.
“The Hanjin saga has the potential to redefine the container shipping landscape,” comments Xeneta CEO Patrik Berglund. “For an industry that has struggled with collapsing rates, severe overcapacity and devastated profit margins—with even Maersk down 90 percent year on year for the second quarter—this marks an opportunity to finally regain the upper hand at the negotiating table.
Hanjin’s failure resulted in an immediate capacity reduction of around eight percent in transpacific and Asian-European routes and this gives competitors an obvious fillip. “We’ve seen the 2M Alliance, MSC and Maersk, moving to launch a new transpacific service,” said Berglund, “while the feedback we’ve received from our community details rising rates, stretched capacity, claims of broken contracts, and a need to go to the spot market, where quotes of between one and three months are not being contracted.
“In many ways the market has been turned on its head,” Berglund added. “Now it’s the liners flexing their muscles again. The question is, how long will this last?”
Berglund says that for many of the firm’s community it’s the stranded inventory that’s the number one priority, with an estimated $14.5 billion of goods marooned on vessels worldwide, belonging to some 8,300 different companies. Many of Xeneta’s customers have “hundreds of containers” stranded at sea.
That’s the immediate concern, but, as he explains, the long-term is also causing consternation.
“Short term rates were already rising on the main Far East Asian to North European port route, the world’s most important trade channel, since hitting lows in March,” said Berglund. “Then the market average price for a 40-foot container stood at $552, in late August it climbed to $1172 and now its $1834. Transpacific routes have climbed from $839 in March to $1887 now.”
Many European shippers are now facing a new contracting season. “This will be a wake up call for the large-volume shippers who have maybe become accustomed to basking in long-term contracts at low rates,” warned Berglund. “In a changed market the carriers won’t be as accommodating. Last term’s prices will suddenly be a distant memory.”
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