Container freight rates stabilise amid global shipping challenges

Container freight rates moved little last week, but the calm in prices contrasts with developments on major shipping routes. Asian ports are struggling with congestion, low water levels are disrupting traffic on the Rhine and the Panama Canal is preparing to reduce transit capacity. Meanwhile, major carriers are gradually returning to the Suez Canal despite the risks.The Drewry World Container Index fell by 1% last week. The Shanghai–Rotterdam route recorded the sharpest decline, with rates falling by 3% to $4,287 per 40ft container. Drewry expects freight rates to remain more or less stable in the coming week.Congestion at Asian ports remains an issue. According to Drewry, congestion at the Port of Shanghai worsened, with waiting times rising to 96 hours from 35 hours a week earlier.Low water on the RhineLow water levels on the Rhine are also disrupting cargo flows. In Germany, rainfall has caused water levels on the Rhine to rise somewhat, allowing inland vessels to carry more cargo again. However, the situation is still far from normal. Panama Canal to reduce capacityDespite the rainy season, the Panama Canal is set to reduce transit capacity. From 3 September, the Panama Canal will reduce daily transit capacity to nine slots at the Neopanamax Locks and 25 at the Panamax Locks. From 15 September, the number of Panamax slots will be reduced further to 23 per day.Return to Suez CanalMSC has become the latest major container carrier to step up its return to the Suez Canal, despite the risks. The company announced this week that it is restoring Suez transits on a limited number of East–West services, including its Asia–North Europe Albatros service. The return remains gradual, however, with contingency plans in place should security conditions deteriorate.US million-dollar fees back on the horizonVespucci Maritime CEO Lars Jensen reminded his LinkedIn followers that the US 'million dollar fees' on Chinese shipping is still set to resume in just 10 weeks from now. The fee was postponed for a year, but no agreement has been reached.In this context it might be a valid assumption that if US rekindles this fee, China will simply repeat what the did last year with fees on US shipping as well. The Chinese rules also applied to vessel ownership and even board composition of the owning entities, says Jensen.According to him, this will particularly affect COSCO, OOCL, Matson and Hede Shipping on the Pacific trade, as well as CMA CGM (APL) on its Eagle Express 1 service and Maersk on its TP7 service, both of which include US-flagged vessels.Agricultural bulk transport on the decline The volume of dry bulk transported by inland waterways in the Netherlands is steadily declining. Agricultural bulk transport is also on the decline. Over the past ten years, the volume transported by inland shipping has fallen by 15%, according to a report by ABN Amro. Over the same period, the volume of agricultural bulk declined by 10%, from 31.9 million to 28.8 million tonnes. The contraction of the European livestock population is the main reason for this decline.Declining demand from Germany for Dutch construction materials is the main reason for the overall drop in volumes. Coal transport is also shrinking as coal-fired power stations are phased out across Europe. The steel industry is under pressure, which is also affecting iron ore transport.For agricultural bulk, the decline in volumes is due to the shrinking livestock population in North-West Europe. As a result, demand for compound feed, including soya and grains, is falling, according to the report. “At the same time, part of livestock farming and compound feed production is shifting towards Eastern Europe, particularly Poland and Hungary. This is creating overcapacity in the compound feed sector in countries such as the Netherlands, which could lead to production capacity being closed or relocated.” The bank expects demand for agricultural bulk in North-West Europe to remain under pressure in the coming years due to the further contraction of the livestock population and the shift in production capacity within Europe. ABN Amro sees opportunities for the inland shipping sector in other types of cargo, such as exceptionally heavy or large goods, including wind turbine components, semi-finished products and containers.