Coming up for air
The container spot freight market rebounds amid a growing number of idle ships and new bunker surcharges.
In what has been a mostly disappointing year for ocean carriers, spot market freight rates are currently enjoying resurgence. Drewry’s World Container Index – a composite of eight major East-West trades – in the past two weeks has swelled by $210 to return losses accumulated over the prior two months.
What is behind this mini-recovery?
Before we answer that question, it is important to give some context to understand the true state of the market. Figure 1 demonstrates that since the mid-point of this year spot rates have been significantly down on the corresponding period in 2018. This is less a reflection on the current market and more to do with what happened last year, when the US-China trade war super-charged freight rates. Therefore, spot rates in 2H19 were virtually destined to look very weak in comparison to an artificially inflated market.