East-West ocean freight rates down 20% with more cuts on horizon

Year-on-year Ocean freight rates for cargo moving under contracts on major East-West trade routes dropped by 20%  in the 12 months up to February and are on course to fall even further next month, according to the  Drewry’s Benchmarking Club. With many transpacific exporters and importers in the process of  finalising negotiations for new eastbound Pacific contracts that come into effect on  May 1, Drewry expects a further fall in contract rates during the second quarter of 2016.
“Following the price war in the spot container shipping market [that] started in late 2015, the contract market is now also going through a catch-up reduction in prices,”  Drewry Supply Chain Advisors Director Philip Damas told the Global Liner Shipping conference in London. “By monitoring contract rates every quarter within the closed user group, companies can determine how well they rank on contract rate levels among their peers and can get increased confidence on actual contract rates which can be secured in today’s very weak market.”