September 2017.Drewry alerts of higher freight costs due to carrier concentration options

Following rapid consolidation among container shipping lines, significant rate increases have been seen in recent months and Drewry anticipates that the momentum of higher freight rates will remain as we move towards 2018. The trend of continuous rate decreases is reversing and the market is undergoing structural changes.

For European exporters to Asia, both spot rates and contract rates have increased since the beginning of 2017 (see chart). This coincided with higher European exports to China in particular, with some capacity reductions as most of the Asia-Europe shipping lines moved to the new mega-alliances (THE Alliance and Ocean Alliance) and with the reduction in the number of carriers on this route (post Hanjin bankruptcy).

China-to-North Continent Europe contract and spot freight rates (indexed)

Sources: Drewry Benchmarking Club and Container Freight Rate Insight

Note: Rates are indexed based on spot rate in May 2016 = 100

Looking at the short-term outlook for 2018 annual contracts and more widely at the medium term, shippers and forwarders must take into account the fact that, compared with 2 years ago, there will be 8 fewer independent major carriers bidding for tenders (see chart).

Consolidation of the container shipping line sector

Sources: Drewry Supply Chain Advisors, derived from financial announcements

Access to reliable shipper data on market rate levels and using advanced procurement tools with strong optimisation capabilities are two ways that shippers can secure the best terms in challenging market conditions. Drewry can provide support via a contract rate Benchmarking Club, a spot market rate platform (Container Freight Rate Insight) and also an advanced eSourcing Ocean Freight Solution.

Philip Damas, director of Drewry Supply Chain Advisors, described the rush of mergers and acquisitions in the past two years as a “super-cycle” of carrier consolidation. He said: “In effect, we have moved from an industry where we used to talk about the top 20 carriers, to 2018 when there will be just 11 left from this list.”

“This, we suggest, will have very deep repercussions on the entire industry; on shippers, suppliers and terminals,” Damas added. “Also on the level of competition between the carriers, where an industry that is moving, quite frankly, towards an oligopoly, will give carriers much more control than in the past.”

Drewry is a partner of the European Shippers’ Council and would welcome comments or suggestions on these articles.

Exclusive content – Drewry ESC

November 29th 2016. ESC Maritime Day 3rd edition takes place in Barcelona, organized together with TRANSPRIME

The ESC Maritime Day is set to be the annual reference marine logistics event for shippers in Europe. This third edition which takes place in Barcelona, following the previous sessions in Brussels (2014) and Antwerp (2015), contains the synthesis and conclusions extracted from previous years to openly discuss the maritime world with all stakeholders from a unique shipper perspective and to build new ways of thinking ahead of the current scenario.

We trust that this singular session with two round tables and a unique networking experience with all agents here today will contribute to feed the dialogue and cooperation amongst all partners and will enlighten the path for building a smarter and stronger connected maritime common thinking.

Organised by: ESC & TRANSPRIME

Hosted & Sponsored by: Port de Barcelona

With the cooperation of: Widoit Quality

[Download in PDF format]


Program


09:00 Opening

Denis Choumert · European Shippers’ Council Chairman

Santiago García Milá · Port of Barcelona Deputy General Manager, European Sea Ports Organization (ESPO) Executive Committee member, International Association of Ports and Harbours (IAPH) President

Jordi Espín · Transprime · Spanish Shippers’ Council Secretary General


09:20 Round table 1 · SOLAS: A new relationship status between stakeholders.

Moderator: Anne Lexelius · Maritime Transport Council Chairman

Philippe Bentz · INTTRA · Global Account Director

  • How can a multi-carrier e-commerce platform bring visibility and ease of implementation to shippers, forwarders and carriers.

Albert Oñate · Cosco Iberia · General Manager

  • Translating a new safety requirement into practical terms.

Guillermo Belcastro · Terminal BEST BARCELONA · CEO

  • Terminal operators: implications and solutions.

José A. Martínez · BDP International · Regional Director South Europe

  • Being between the devil and the deepsea when implementing a new regulation.

Lennart Heip · Dow Chemical · Belgium Shippers’ Council Chairman

  • How do shippers comply? The tare challenge.

Q & A


11:00 Networking break


11:30 Round table 2 · Alliances & coopetition

Moderator: Anne Lexelius · Maritime Transport Council Chairman

Christa Sys · University of Antwerp · Holder of the BNP Paribas Fortis chair of transport

  • Setting the scene, what will be the future. What is the impact of the new alliances.

Itai Rabinovici · DG COMPETITION · Case Handler

  • Latest development in competition topics, GRIs, alliances, global summits, links with other competition authorities.

Carles Mayol · Barcelona Port · Sales Manager

  • Challenges faced by ports in the scenario of changing shipping alliances.

Denis Choumert · European Shippers’ Council Chairman

  • Shippers’ view on the new alliances & coopetition scenario.

Q & A


13:00 CORE PROJECT – EU Funded Project coordinated by ESC

Nik Delmeire · Secretary General ESC

  • Making global supply chain more transparent & resilient with safety and security to the highest level of commitment.

13:30 Barcelona Port Boat Tour


14:30 Networking lunch