Martin Dixon News

Smart devices have the potential to radically transform the utility and value of shipping container equipment assets.According to Drewry, Smart containers have increased in prominence in a very short space of time and the pace of adoption is expected to accelerate over the next five years.A container becomes “smart” when fitted with a telematics device that provides real-time tracking and monitoring, enabling operators to increase turn time of their container equipment and so utilization. It also allows beneficial cargo owners (BCOs) to understand the location and status of their cargo so that they can better control their supply chains.“There are a number of factors driving this market growth…

As the cost inflation is set to accelerate on higher insurance premiums, average vessel operating costs rose modestly for the second year in succession following two years of marked declines, according to the latest report published by global shipping consultancy Drewry.The report titled 'Ship Operating Costs Annual Review and Forecast 2018/19' said that typical ship operating costs accelerated moderately in 2018 as the uncertain recovery in freight markets across most cargo sectors gained momentum.Opex costs are heavily linked to developments in the wider shipping market as some costs, such as insurance, are connected to asset values…

Despite moderating perishable seaborne trade growth, continued modal shift will sustain expansion in the containerised reefer trade and so support freight rate development, according to Drewry’s latest Reefer Shipping Annual Review and Forecast 2018/19 report, by global shipping consultancy Drewry.Global seaborne reefer trade continues to expand, posting a gain of over 5% in 2017 to 124 million tonnes, a big improvement on trend growth over the past 10 years of 3.6% a year. Underpinning this progress was strong growth in banana, meat and fish trades.Drewry estimates that containerised reefer traffic expanded by 8% in 2017, outpacing the growth in overall seaborne reefer trade.

Cost growth returned to seafaring in 2018 and is projected to accelerate moderately on recovering vessel earnings and continued shortfall in officer numbers, according to the latest Manning Annual Review and Forecast report published by global shipping consultancy Drewry. Manning costs have risen moderately in 2018 following several years of stagnation as a recovery in most cargo shipping markets has taken some pressure off vessel operators, enabling employers to lift wage levels, particularly amongst the market-related officer ranks. “This follows several years when average seafarer pay had flat lined because the depressed state of most cargo markets had made wage increases almost unaffordable,” said Drewry’s director of research products Martin Dixon.

The move towards container leasing and away from carrier ownership continues unabated and the leased fleet now has a clear majority over that owned by transport operators, according to the latest edition of the Container Census & Leasing and Equipment Insight published by global shipping consultancy Drewry. Leasing companies accounted for 55% of container purchases in 2017, which continues the trend seen for most of this decade. With the fleet of containers owned by transport operators growing by a mere 2.4%, the leased fleet added 6.7% and the share owned by lessors is now nearing 52%. “Drewry expects this trend to continue over the next few years,” said Drewry’s director of research products Martin Dixon.

The cost of operating cargo ships rose marginally in 2017 following two consecutive years of falls, but ship owners should prepare for higher costs led by a spike in insurance premiums, according to the latest Ship Operating Costs Annual Review and Forecast 2017/18 report published by global shipping consultancy Drewry. After two years of marked decline, average vessel operating costs stabilized in 2017 as pressure on owners was lifted by a nascent recovery across most cargo shipping markets. Trends in ship operating costs are heavily linked to developments in the wider shipping market, external cost pressures notwithstanding. But the recovery has not been uniform across all sectors, and risks remain.

Despite a recovery in cargo shipping markets, ship manning costs will remain suppressed as shipowners and operators continue to be financially challenged and the officer shortfall recedes, according to the latest Manning report published by global shipping consultancy Drewry. The lack of confidence in the industry has seen wage increases almost at a standstill since 2009, and over the past year average officer rates have slid into reverse. While there remains an overall shortfall in officer numbers, this has reduced markedly over the past year and the poor financial state of the industry has forced employers to limit labour costs to affordable levels.

Shipping consultancy Drewry and shipment management software solutions provider CargoSmart have expanded their cooperation agreement to cover a broader exchange of market intelligence data on the container shipping market. The two companies first announced their cooperation agreement in April 2012, when Drewry began using data from CargoSmart to augment its coverage of ocean carrier service reliability on key container shipping trades. “This broader collaboration will enable Drewry to take greater advantage of the data available from CargoSmart’s system…

Average global freight rates have fallen to a 15-month low, according to Drewry’s new online Container Freight Rate Insight. Drewry’s Global Freight Rate Index fell 12% in April to reach its lowest level since February 2012, when container shipping was still recovering from the last ocean carrier price war. The Index, which is a weighted average of freight rates across the 600 trade routes covered by Drewry’s Container Freight Rate Insight, reached a new low of $2,065 per 40ft and has fallen 18% since the start of the year.

The Drewry Hong Kong-Los Angeles container rate benchmark, soared by 17.5% to US$2,452 per 40ft container this week. Last week’s Drewry transpacific price benchmark dated 1st August increased by just $71 per 40ft container from levels in the previous week, but it has now become clear that the rate increase was deferred by most carriers. “We said last week that one factor in the price changes was that carriers are staggering the implementation of this month’s GRI [General Rate Increase],” explained Martin Dixon, Drewry’s research manager for freight rate benchmarking. The latest $500 price increase ($429 this week and $71 last week) propelled spot freight rates from Hong Kong to Los Angeles to their highest level this year. This week’s $2,452 rate is 89% higher than this time last year.

Drewry and the World Container Index have published a White Paper that explains how index-linked contracts work, the first definitive guide on the subject since widespread adoption commenced two years ago. The White Paper, which is FREE to download from Drewry’s web site, examines the causes of recent container freight rate volatility and how index-linked contracts can help mitigate the impacts of such instability. It explains how these new contracting arrangements work with reference to current models in use and summarises the extent of industry adoption thus far. “This White Paper is a must read for any organisation considering the use of index-linked contracts,” said Drewry’s freight rate research manager Martin Dixon.

A short-lived revival in rates still means rich pickings for shippers coming into the transpacific contracting season, but beware the capacity crunch to come. Shippers should not lose sleep over the recent, short-lived jump in spot rates, but ought instead focus on ways to mitigate the risk of another sudden capacity crunch later in the year, urges Drewry Maritime Research. Freight rates on east-west trades have been in the ascendency of late. Drewry's Hong Kong - Los Angeles container rate benchmark, as published in the Container Freight Rate Insight, leapt 28% in the first week of the year. The benchmark rose $396 to $1,832 per feu and successfully sustained this level into the second week.

Half of all index-linked contracts filed with the US Federal Maritime Commission reference Drewry’s Container Freight Rate Insight pricing benchmarks. Drewry Maritime Research’s container freight rate benchmarks are the index of choice in index-linked container contracts, according to the US Federal Maritime Commission (FMC). The agency also indicated that uptake of index-linked container contracts on US trades was fast growing. Index-linked contracts allow freight rates to be adjusted during the life of the agreement by reference to an external, independent market price index. Speaking at the Container Freight Derivatives Association’s (CFDA) Global Container Freight Forum in London last month…

Drewry Maritime Research, the global leader in freight rate benchmarking, has expanded its flagship Container Freight Rate Insight publication and now provides freight rate benchmarks on 550 international trade routes. Published monthly, the report provides all-in spot rates on all the key shipping routes of the world, including both headhaul and backhaul trades. In  addition to the monthly report, subscribers also have access to an online database of both current and historical freight rate data dating back to January 2006. Drewry collects its proprietary freight rate data from active freight forwarders in the Far East, South Asia, the Middle East, Europe, the United States, Canada and South America, who provide their freight rates confidentially to Drewry.