Drewry’s Benchmarking Club is a closed user group of multinational retailers and manufacturers, which closely monitors the contract freight rates. It appears that freight rates for cargo moving under contracts on the major East-West trade routes had sharply reduced by 7% since the beginning of the year, the steepest fall since inception in March 2014.
The rate Index is calculated based on Trans-Pacific and Asia-Europe contract freight rate data provided confidentially by shippers.
The fall in contract rates has been the result of the following:
- Lower fuel costs
- Excess vessel capacity
- Intensive competition between shipping lines.
- Lower bunker costs since the fourth quarter of 2014.
- Some carriers granting shippers temporary reductions to secure cargo
The weakened stock market and fall of bunker have deteriorated the contract rate levels. As a result, the Drewry Benchmarking Club contract rate index declined 5% in the 12 months to August 2015. The contract rates are expected to decline further because of falling fuel costs and continued overcapacity in the market.
Given the volatility of rates in both the spot and the contract market, Drewry Index helps the shippers to forecast and plan their 2016 budget for the freight costs. Due to non-disclosure agreements with all shipper members of the Benchmarking Club, Drewry cannot share detailed cost benchmarking intelligence with non-members.
The Drewry Benchmarking Club contract rate index measures freight rates under annual contracts and not on spot freight rates.
Source: Drewry Shipping Consultants Ltd
