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Analysts to Fear for Impact of September GRIs with Little Rise in Asia-Europe Container Rates of Cargo Services

It is seen from last three months that Asia-Europe facing continuous decline in Asia-Europe container rates. But this month, a small hike is seen in Asia-Europe container rates of shipping cargo services. It will be a great disappointment for Asia-Europe as the impact of container spot rates will fall on them and new GRIs which come into play from September 1. It is known from a source that Shanghai Containerized Freight Index (SCFI) offering its services for Mediterranean and North European ports is recorded hike from 122 dollars per teu to 248 dollars per teu. This hike seen in SCFI lifted spot rates of Asia-North Europe and Asia-Mediterranean to 591 dollars per teu and 697 dollars per teu respectively. In the month of August, 400 dollars per teu sharp increase is seen in spot rates towards North Europe in the first week of the month. Although GRI was around 1000 dollars per teu, in the following weeks, spot rates are given back to shippers terming as non-existent peak season.

It is an expectation from analysts that the impact of September month GRI would live for a short period of time as cargo services demand falls sharply in the month of October once again. This is expected as because China’s gold week holiday is upcoming reducing the impact of GRI for short time period. It is determined the records carried out by Alphaliner, ocean carriers have cancelled about 75 sailings from Asia-North Europe in this year. Whereas in last year 28 blanked voyages are planned over the time period January to August. It means this year, there are more cancellations compared to last year. Even after multiple cancellations, there is still 2.3 percent capacity is seen on the tradelane due to spread out of bigger ships in place of smaller tonnage capacity ships. Moreover, it is determined that demand has fallen down on some routes. A decline in demand is seen on headhaul route which dropped by 3.5 percent in the first half of the year. Compared to the previous year, a great decline is seen in demand enabling on different routes. All these records indicate weak market further in the upcoming days as exports of china are falling at the rate of 8 percent every year.

It turned out to be a difficult situation for carriers to escape. There are no options left for carriers to balance the demand and trade in parallel. The only way left for them is to cancel more sailings to Europe for some time depending on some big ships until the trade recovers. From the financial outlook of container lines, it is clear that they are to be treated as world’s biggest tradelane in the second half of the year 2015 whereas, in the first half the results are not that much satisfactory. Several carriers said that the results recorded in the first half are only due to the stellar performance. Even in this bad period, the grace thing for carriers is the reduction in bunker fuel prices to below 200 dollars per tonne bringing the unit value down further. Although it is advantageous to some extent, oil weakness acts as a symptom for uncertainty sweeping the commodity markets, which is not good for global trade.

Source From: http://theloadstar.co.uk/small-rise-in-asia-europe-container-rates-but-analysts-now-fear-for-september-gris/