Ocean Freight Rates Expected to Lag
"Given the considerable amount of overcapacity currently seen on some trade lanes — in particular Asia-Europe — we consider it unlikely that peak season volumes will be sufficient to stimulate a meaningful upturn in freight rates," the report said.
They forecast a 6.6 percent year-over-year increase in global container volume by the third quarter of 2011. The forecast for the fourth quarter 2011 was 9.8 percent. They also stated that their predictions will "be helped by soft comparisons with weak volume in the final months of 2011." In their last Counting Containers report they forecast an increase in global container volume of 7 to 8 percent for the year, but are now forecasting an 8.1 percent increase.
Global container volumes were high in the second quarter this year, and according to an article on the Journal of Commerce site, are "likely to set a record for global volume". However, a lagging in inventory restocking, which isn't expected to increase by much through the peak fall season, is likely to keep freight rates near flat. Macquarie is not expecting inventory restocking to increase by much in the second half of this year despite a "historically low inventory-sales ratio for US retailers"
"Contrary to the view of some industry observers, our analysis does not suggest that container volumes … will benefit from a meaningful increase in inventory levels," the report said. Another reason for container volume growth to be lower than expected was that volumes could be affected by improved container stuffing, which would improve the capacity of containers and therefore reduce the number of boxes needed.
Macquarie said that some companies utilizing ocean shipping, such as Wal-Mart, had recently undertaken projects to maximize the amount of cargo it could fit into an <a rel="nofollow" onclick="javascript:_gaq.push(['_trackPageview', '/outgoing/article_exit_link/5177291']);" href="http://www.shiplilly.com/"title="Ocean Freight">ocean freight</a> container, partly by minimizing packaging. Wal-Mart also has "implemented a 3 percent penalty on suppliers whose products arrive at regional distribution centers outside a four-day delivery window".
They report that US companies have already restocked their inventories that were depleted in 2009. They said that the manufacturers' inventories are what they would consider, excessive. Companies are just being more careful about what they order and want to better manage their supply chains. The new trend of keeping a small inventory may be "an ongoing structural shift rather than transitory weakness".
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In March 2010, the average container shipping rates for moving a 40-foot container between two ports across an ocean rose to $2,716. In March 2009, the container shipping rates were $1,557. This was an increase of more than 74% on container shipping rates in a 1-year time span. The increase on container shipping rates on some routes is even more dramatic, with container shipping rates to Europe more than tripled.
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