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Saturday, October 21, 2017

Global BCOs Hit by Rising Contract Rates from Asia

September 18, 2017

Graph: Drewry Benchmarking Club

Graph: Drewry Benchmarking Club

 Contract freight rates paid by Beneficial Cargo Owners to move their products by container have increased for a 4th consecutive quarter, according to actual contract rate data from the Drewry Benchmarking Club.

 
Average contract rates on two major container trade routes - from Asia to North Europe and North America – have increased by another 4% between the second and the third quarter of this year. This means that the latest Drewry Benchmarking Club Contract Index has increased by 39% in the year to the third quarter, based on $2 billion of ocean freight spending.
 
“The container shipping market has seen a sustained, radical reversal away from the previous, long deflationary trend,” said Philip Damas, Head of Drewry’s logistics practice. “Not only are freight costs increasing, but rapid consolidation in the supplier base, changes in supplier behaviour and new developments in tender technology will bring real change and uncertainty to the ocean transport procurement environment,” he added.
 
Drewry reiterates its previous warning to BCOs that they need to re-think their contract negotiation strategy and that, by incorporating benchmarking and e-sourcing best practices such as eSOFS™ in their tender management process, they can mitigate rate increases.
 
Full benchmarking data on freight rates, detention and demurrage conditions and transit times are available to shippers within the benchmarking group, provided they meet the group’s non-disclosure agreement clauses. Under the group’s rules, Drewry is allowed to disclose in public only high level summary index numbers.
 
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