- 2017 proved to be the most challenging lead-up to Chinese New Year that we’ve experienced. We saw a huge increase in demand for shipping space in early January increasing prices and adding pressure to the supply chain.
- We experienced a very strong bounce back after Chinese New Year in February resulting in an increase in freight rate levels.
- There’s been an increase in demand of container shipments from the Indian Sub Continent which has increased prices in line with the increased demand.
- A new route to market opened in January with the first direct rail route between China and the UK. And while we think that the service is not a viable alternative to Sea Freight based on current capacity levels, cost and availability; it could be a potential direct replacement to the traditional Sea/Air service.
- We’ve seen a change in the dynamics of the market following the collapse of the 7th largest shipping company – South Korean group Hanjin – weighed down with debts. This dramatic bankruptcy created a catalyst for consolidation of the shipping industry as shipping companies have been forced to focus on creating sustainability in 2017.
- The preparations for consolidation in the market have begun. The new alliances formed have created a more stable position. The new alliances will commence in Quarter 2 meaning that capacity will remain tightly controlled during, and most likely after the implementation.
In Quarter 2 we anticipate that the full impact of the ‘new world’ of the shipping industry will be felt. We expect that freight rate levels to continue to stabilise as the months progress. Whether this plays out or not, only time will tell.
We will keep you updated as the year progresses on any further industry news.
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