For months, all available Asia-Europe capacities have been filled and rates have been high. While there have been signs that demand is beginning to soften, we don’t anticipate that rates are going to fall significantly anytime soon. As a result, now is a good time to stay agile and look for multiple sourcing options.
To help guide both buyers and sellers through this volatile market, here’s an overview of what’s happening with Asia-Europe container rates and what to expect in the coming months.
The 2021 Economic Outlook
An IHS Markit Analysis predicts that the European economy will have a slow start to the year, with hopes of recovering in the second quarter after an increased vaccine rollout. More specifically, the report anticipates that the Eurozone GDP will shrink by 1% in the first quarter with hopes of growing by 2% in each of the next two quarters.
In response to that, there are some indications that Asia-Europe spot rates will fall. While many Asian markets are continuing to keep record high prices, European importers are beginning to push back. Keith Gaskin of Seko Logistics notes that “while carriers may want to hold on to these high rates, their behaviour has meant that shippers are diversifying from deepsea trades.”
What to Expect in the Coming Months
As companies push back against high prices, look for other sourcing solutions or hold off on shipments, there is some indication that Asia-Europe container rates will drop, but not to pre-pandemic levels.
Dominique von Orelli of DHL anticipates that “rates will stabilize on a more moderate level over the next few weeks. Overall, rates will remain much higher than what we have seen before, but not at the sky-high levels as in the past.”
Similarly, Alan Murphy, CEO of Sea-Intelligence Maritime Analysis, anticipates that Asia-Europe rates will slide some but will remain much higher than they were before the pandemic. Murphy believes “the real drop will happen from March through May when the big volume shippers will be importing less.” But he goes on to note, “we do not see any return to the pre-pandemic rate levels.”
While there is some indication that prices might slide some, they continue to remain high and unpredictable. With this in mind, companies should be looking for other sourcing options and remain as flexible as possible.
Keeping up with the industry news and market forecasts is a daunting task, in conjunction with managing a supply chain it may seem impossible. ClearFreight closely monitors all market shifts and is prepared to offer our clients the best logistics solutions to fit their needs. Contact a team member today to see how we can make managing your supply chain easier and more effective.