Economic Update

12-Jul-2010 In previous newsletters, we have forecast shipping rates ex China (with some degree of accuracy) and now it is time for some more crystal ball gazing from Roy the Roo, but first some news that provide pricing pressures:

1. Potential GFC Mark II led by Europe and to a lesser degree, the US

2. Additional large capacity ships (greater than 10,000 TEU’s) added to the Asia/Europe route

3. Cost of new containers increased by greater than 35% in the last 6 months

4. An increase in volumes has brought back over 1.2 million TEU of idle and new vessels into active service in the last 3 months

5. No end to the strike at the 2 largest ports in the US, Long Beach and Los Angeles due to a push for the stevedores requesting a 21% increase in salary over the next 3 years

6. Freight forwarders are bracing for a new capacity crunch on the Asia-Europe trade during an earlier than usual peak season with increased rate levels.





Roy’s forecast?

Sea freight: Rates ex China to Australia will remain soft however to Europe will possibly firm, depending on the GFC II, rates ex Australia to SE Asia and Asia will continue to climb, rates ex USA to Australia are forever on the increase due to tight space.
Airfreight: In general, as space tightens globally, rates and fuel surcharges are on the increase.

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