Concerns remain over the carriers’ abilities to recover the costs of compliance with the new IMO 2020 low-sulphur fuel regulations, despite the long-term contracted market experiencing a third consecutive month of increases according to Xeneta.
The analytics platform’s latest report showed that rates are up 8% year-on-year, with December’s 0.9% rise being consolidated by a 2.2% increase over the course of January.
Xeneta CEO Patrik Berglund stated that there is inconsistency across the board with the European import benchmark up 2.4% against last month and the export figure showing a marginal increase of 0.3%.
Meanwhile, the Far East import index rose by 4.9% and is now up 10% against the all-time low recorded in October 2019 while exports were up 4.5% against last month.
The US import index recorded a rare fall of 2.1%, but is still up by a huge 22.5% year-on-year, while the export figure surged by 5.5%, leaving the benchmark up 16.7% year-on-year.
Berglund stated: “Our rate data also does not show IMO 2020 having had any significant impact in the rate levels so far.
“The carriers are yet to find the right formula for recouping the cost of more expensive fuel. They face real difficulties on commoditised routes, where pricing is critical to achieve market share, and the slight rises we see are mainly because of basic supply and demand, nothing more.”
The short-term Far East to Europe corridor shows a spike, suggesting that at this point smaller volume players seem to be the ones picking up a big portion of the new fuel costs.
Berglund added: “The trans-Pacific is entering its negotiation period, and this is where it can get interesting for the industry.
“We would expect to see carriers take off the gloves and bullishly attempt to reclaim the new regulation costs during the Q2 contract period, if indeed fuel regulations have a true impact on long-term market rates.”
Xeneta’s XSI Public Indices is based on crowd-sourced rates data from leading global shippers, with platform participants including Electrolux, Continental, Unilever, Lenovo, Nestle, L’Oréal, and Thyssenkrupp.