With the Year of the Pig upon us and the celebrations of the Chinese New Year culminating with today's Lantern Festival, shippers and importers are looking for the annual decline in rates. Rates typically increase in the weeks leading up to the CNY as shippers try to move as much freight out before their factories shut down for the extended holiday. This surge in demand carries with it a higher freight rate and puts space at a premium. Once the factories close and the celebrations begin, the demand drops and the rates may follow suit.
This year looks to be different. In anticipation of the slack, carriers are implementing blank sailings to restrict capacity and keep the rates from sliding as much or for as long. According to the maritime consulting firm, Drewry, there are 15 blank sailings announced for February alone. The anticipation is the rates may recover back to pre-holiday levels in a couple of months.
The bunker rates are currently down from their highs of 2018, which has brought some relief to shippers. They are expected to remain at lower levels until later in the year when the International Maritime Organization will require carriers to use a lower sulfur fuel, which comes with a higher price tag. Carriers will be focusing on recovering the higher cost by raising the bunker surcharge and keeping the base rates stable.
John S. Connor will continue to monitor the market trends and will keep our customers updated with the latest information available.