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US$321.00 for a box from Shanghai to Rotterdam?

OSLO: April 26, 2016. Price comparison site Xeneta says the competition between ocean box carriers is so fierce they no longer charge according to commodity type as they focus on just filling their vessels.

Xeneta argues that oversupply, better supply chain management and falling fuel costs have made the market so competitive over the last 18 months that box content is no longer relevant in negotiations with shippers.

The firm says the average price for a 40-foot container on a short-term contract from Shanghai to Rotterdam has fallen 78 percent between July 2014 and April 2016 to reach US$595.00. As at April 19, the lowest price on offer has dropped 82 percent to US$321.00.

COSCO GreeceXeneta CEO Patrik Berglund said: “In today’s market there’s too many boxes chasing too few cargoes. Traditionally, cargo was rated by weight or measure, with the ratings based on the cargo type.

“Calling a carrier or NVOCC’s rate desks for ocean freights was a painful experience, with negotiations based on cargo descriptions, packing, and cube - all designed to bring maximum revenue to the carrier.

“But now, as long as the box isn’t overweight - although even that isn’t always an issue these days - or filled with hazardous material, that’s all been pushed to the side. The carriers just want a full box, period.”

Berglund said the reason for the price slump is because slowdowns in the Chinese and EU economies have cut Chinese imports by 19 percent and exports by 13 percent over the past 18 months.

“When that’s married to the fact that 208 new ships were introduced to the market in 2015, boasting a capacity of 1.67 million TEUs, carriers have a major problem. Namely, a stunning 8.1 percent oversupply of TEU’s,” he declared.

Noting the possibility of a new alliance between COSCO, CSCL, Evergreen, OOCL and CMA CGM could challenge Maersk and MSC, he said the result could be a “perfect storm” to drive prices even lower.

“In this environment there’s rumors of rock bottom prices, with mentions of boxes booked for Qingdao – Rotterdam for as low as US$100, or even lower. So, at present, ‘what’s in the box’ isn’t the question, it’s ‘can we have your business please’?”

Xeneta’s shipping indexes comprise over 11 million contracted rates and covers 60,000 global trade routes.

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