Shipping Companies Believe Spot Rates Are At Peak

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  • One of the world’s biggest shipping lines has decided to stop increasing spot freight rates on routes out of Asia to Europe and the U.S.
  • As it sees an end to the rally that has seen prices hit records.
  • The price gains came as the economic recovery coincided with reduced shipping capacity.
  • It has put inflationary pressure on manufacturers in Asia already grappling with higher commodity and electricity prices.

A recent news article published by Ann Koh from Bloomberg in the Economic Times states that shipping lines think spot rates have peaked.

Hapag-LLoyd AG thinks spot rates have peaked

Hapag-LLoyd AG thinks spot rates have peaked and further increases are “not necessary,” according to Nils Haupt, the Hamburg-based company’s head of corporate communications.
The move comes after French rival CMA CGM SA last week froze rates, saying it was prioritizing long-term relationships following a rally that has seen some spot rates jump more than sixfold in the past year.

The price gains came as the economic recovery

The price gains came as the economic recovery coincided with reduced shipping capacity, putting inflationary pressure on manufacturers in Asia already grappling with higher commodity and electricity prices.
While the historic rally led maritime regulators in the U.S., China and Europe to meet virtually last week to discuss the impact on snarled global supply chains, Hapag-LLoyd’s decision “was not requested by governments or regulators,”Haupt said.

While many shipping lines have taken advantage of rising spot prices, the rally is expected to “come to an end at some point,” said Jim Bureau, chief executive officer of logistics digital platform provider JAGGAER.

“The supply chain is extremely fragile right now,” he said. “How much more cost can carriers practically take on without increasing financial risk on both buyer and supplier?”

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Source: Economic Times