East-West ocean freight rates dropped by a fifth in the year to February, according to Drewry’s Benchmarking club.
The club is a closed user group of multinational retailers and manufacturers who monitor their contract freight rates. The Contract Rate Index declined by some five per cent in the three-months to February and takes the fall from February 2015 of 20 per cent.
This indicates an acceleration of contract rate erosion. Lower fuel charges accounted for the minority of the reduction in rates.
Drewry expects a further fall in contract rates during the second quarter of 2016. “Following the price war in the spot container shipping market started in late 2015, the contract market is now also going through a catch-up reduction in prices,” said Philip Damas, director of Drewry Supply Chain Advisors.
“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.”