Will Shipping Get Worse?
12-06-2008
September will be the crunch time globally, with more shipping line mergers, sell offs and ocean freight rate increases which will provide a clearer direction. What we already know is:
 
- Bunker fuel is now ten times higher than it was five years ago
- Fuel costs are higher than the ship charter
- Oil suppliers do not want fuel priced in USD
- European rates are now sold in Euros
- With the US share market weak, brokers are speculating in future oil prices inflating fuel prices
- Low sulphur content fuels will be $30-60 per tonne above standard bunker rates
- The Chinese earthquake will draw in domestic steel surplus pushing up steel prices further
- Chinese imports will be controlled until after the Olympics
 
We have not yet seen the peak in ocean freight rates. Low Waste rates were necessary for back loading, but will this be necessary in the future or will line consolidations simply balance out the vessel weight and charge accordingly to vessel size and not the commodity shipped?
 
Box rates below US$1000 ( $45/mt ) may be rare.  Freight and internal handling and transport costs will be as much as 50% of the selling price.  Landfill charges will increase and subsequently add value to waste materials which will be essential for survival.