Container box freight rates may face a normal seasonal dip in Q4, after the Golden Week holidays, but a quick recovery is possible for short-haul routes in the Atlantic amid extra EU sugar demand. Some rates may come from a void sailing announced by a couple of carriers for October, which may keep capacity tighter, but the influence of this on the actual freight could be limited.
Despite facing a similar seasonal decline, there are still a few factors in play that could see that market rebounding quicker. From October 1, the current EU sugar regime officially ended for production quotas and exports after 11 years. With most producing countries having taken advantage of the lift in production quotas and increased their planted area this season, export forecasts for this season could realistically see container demand for sugar double.
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Video Transcript
Welcome to The Snapshot – our series which examines the forces shaping and driving global commodities markets today.
Container box rates may face a normal seasonal dip in Q4, after the Golden Week holidays, but a quick recovery is possible for short-haul routes in the Atlantic amid extra EU sugar demand.
The industry thought August and September would be firm for the North Asia to UK and North Continent route. Carriers attempted to implement monthly rate increases and Peak Season Surcharges. The end-users and logistics companies did not entertain their optimistic view and prices on it dropped $400 instead this month, closing at $1,200/FEU.
The speed of the volume recovery post the Golden Week holidays slowdown may be a key factor to determine the future rate evolution. Though, traditionally cargo demand in November is not as strong as October due to vessels arriving in Europe during Christmas/New Year holiday.
Some support for box rates may come from a void sailing announced by a couple of carriers for October, which may keep capacity tighter, but the influence of this on the actual freight could be limited.
The horizon may look a bit sunnier for the shorter haul routes, like the UK and North Continent to the Mediterranean. Despite facing a similar seasonal decline, there are still a few factors in play that could see that market rebounding quicker.
From October 1, the current EU sugar regime officially ended for production quotas and exports after 11 years. For the last 10 seasons the exports have been capped around 1.3-1.5 million metric tons, this equates to roughly 65,000 twenty foot containers.
Most producing countries have taken advantage of the lift in production quotas and increased their planted area this season. Export forecasts for this season range from 2.5 to 5 million mt, so we could realistically see container demand for sugar double.
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Share your opinion and suggest routes you would like to see rates on.
Until next time on the Snapshot—we’ll be keeping an eye on the markets.