Trading Update

As the market limps closer towards the start of peak season, rates remain uncertain, with last weeks gain across China to Europe softening to flat or negative levels. China to USA climbs out of its 11 cent slump last week, gaining 5 cents.

Forward curve activity appears to be pricing in a long-term base price increase, perhaps linked to a look into forward middle distillate fuel prices. Both China to US and China to Europe are up 5 cents on average value for 2020. In the near term, China to US drops 5 cents in line with spot market value, with China to Europe gaining 6 cents in November. This can be attributed to a perceived peak spike starting at the end of October.

Market Comment

The market is demonstrating a lack-lustre climb into the start of peak season, with a few glimmers of longer term cross-border trade gains off of the back of Trump Administration trade war concessions, and a peculiar mix of either disastrous or highly positive news regarding Brexit negotiations.

All the while, tensions linked to the Abqaiq oil facility attack have not abated. Escalating rhetoric pointing the finger of blame squarely at Iran, combined with somewhat overly-optimistic promises from Aramco to recover the supply deficit, have held up crude prices (up 0.4% to $64.68 this morning). IATA helpfully pointed out in their report late last week that this price hike would likely not lead to a recession, rather market participants need to remain concerned if the increased fuel costs to airlines breach acceptable limits and are passed directly on to freight forwarders and other consumers.

A special note goes to the liquidation of Thomas Cook today, a poignant reminder of the disastrous effect of billion dollar market related losses on entrenched, long-standing businesses. In truth airline closures linked to market conditions such as demand volume or fuel price have been common place in 2019, highlighting the requirement to manage risk as much as the need to enhance performance and profit.

All the while the container market continues to suffer, with market fundamentals drawing rates downward on both Asia-Europe and Transpacific trade lanes prior to Golden Week. Whilst one might assume that this is creating a buyers market, blank sailings have become an increasing fact-of-life to the ire of shippers and 3/4PLs.

Basket USD/KG CHANGE CHANGE % MTD
CHINA - EUR 2.46 0.00 0.00% 2.42
CHINA - USA 3.21 0.05 1.58% 3.21
Blended USD/KG CHANGE CHANGE % MTD
PVG/EUR 2.32 -0.01 -0.43% 2.28
HKG/EUR 2.59 0.00 0.00% 2.57
PVG/US 3.01 0.05 1.69% 3.07
HKG/US 3.42 0.05 1.48% 3.35
Airfreight Route (AR) Description PREVIOUS USD/KG CHANGE
AGR 1 HKG to LAX & ORD & JFK 3.46 3.38 -2.31%
AGR 2 HKG to LHR & FRA & AMS 2.71 2.62 -3.32%
AGR 3 HKG to SIN & BKK & PVG 1.13 1.11 -1.77%
AGR 4 PVG to AMS & FRA & LHR 2.33 2.34 0.43%
Forward Curve - Indicative Update
CHINA - EUROPE | USD/KG
BID ASK VALUE CHANGE
Sep-19 2.44 2.48 2.46 0.00
Oct-19 2.43 2.51 2.47 0.00
Nov-19 2.58 2.66 2.62 0.06
Q4 19 2.85 2.89 2.87 0.00
Cal - 19 3.04 3.14 3.09 0.00
Cal - 20 3.49 3.59 3.54 0.05
Forward Curve - Indicative Update
CHINA - USA | USD/KG
BID ASK VALUE CHANGE
Sep-19 3.21 3.25 3.23 -0.05
Oct-19 3.40 3.80 3.55 0.00
Nov-19 3.53 3.69 3.61 0.00
Q4 19 3.54 3.62 3.58 0.00
Cal - 19 3.40 3.50 3.45 0.00
Cal - 20 4.00 4.20 4.10 0.05