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Shippers should open talks now on container contracts, says Drewry


Some carriers are currently pricing very aggressively in the market and seem keen to secure volumes rather than profits, according to Drewry. Gavin van Marle of the The Loadstar reports


Shippers with sizeable volumes shipped under annual contracts should already be opening negotiations with their carriers for 2020, according to Drewry Supply Chain Advisers. The reason is the continuing weakness of


freight rates on the transpacific and Asia-North Europe container trades, said the analyst. It noted that while container spot rates on the


two largest deepsea trades had largely been in freefall this year – declining on average by 12% since the beginning of the year – that weakness had now spread to the contract market.


Falling rates Drewry said its benchmarking club contract rate index, based on average transpacific and Asia- Europe contract rates of over 90 multinational shippers, had been falling since July, which was down 2% on June, while August saw contract rates fall a further 3%. And it suggested that the spot rate weakness,


in combination with carrier worries about slack demand, make it an opportune time for shippers


to begin negotiating for next year – usually, contracts on Asia-North Europe are signed at the beginning of the calendar year, while for the transpacific it is around the beginning of May. Drewry said: “Our recent experience of running


ocean bids showed that some carriers are currently pricing very aggressively in the market and seem keen to secure volumes rather than profits.


“But there are usually some secondary risks


with any decision and this is the case now with new tenders: shippers can expect to reduce their base rates by going to bid now and by using procurement best practices, we believe, but should not expect to be able to reduce or even freeze their current bunker charges. “The two will soon move in opposite direction, due to the IMO 2020 regulation.”


Support your local Member group


BIFA holds Regional Member meetings around the UK and listed right are those due to occur soon. If you would like to attend and find out more about BIFA and what we do, then contact the appropriate Regional Consultant to BIFA. All BIFA Members are entitled and


encouraged to attend their regional meetings however pre-booking with the named contact is essential.


16


Region Stansted


Regional Members’ meeting Gatwick


Regional Members’ meeting Southampton


Regional Members’ meeting Date Time Venue Thu 5 Dec 1230 Transvalair, Crawley


Tue 10 Dec 0800 Duke of Wellington, Southampton


Full contact details are shown on page 3 of this issue. December 2019 BIFA Contact Tue 3 Dec 1130 Stansted Airport Limited Mike Jones Mike Jones Mike Jones


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