Container spot rates on a ‘likely recovery path’: HSBC

Cont’d. from Pg. 4

It does though seem to mark a turnaround from a more than year-long plunge in container spot rates that has seen rates lose 84% from the record high of $10,377 per FEU in September 2021 reported by Drewry’s World Container Index (WCI).LastThursday,13thApriltheWCIremainedlargelyflat at$1,709perFEU.

HSBC commented, “In fact, we have noticed that the decline in market freight rates has been tapering since December as they have already come close to market breakeven levels. We expect market spot rates to stabilise at current levels in the coming months and gain support from a sequential improvement in volumes in 2H23.”

The report noted that the Clarksons Time Charter Index for containerships had also recovered by 13% from its midFebruary low, another sign that spot rates were not just stabalisingbutona“likelyrecoverypath”.

In another positive sign Chinese exports also rose 15% year-on-year in March reversing five consecutive months ofdecline.

The continued threat of labour disruptions at US West Coast ports of Los Angeles and Long Beach as negotiations with unions dragging on this could also benefit container lines in their negotiations on contract rates HSBC believes. “We argue that this will likely further encourage beneficial cargo owners to sign contracts above spot rates to ensure servicereliability.”

However, looking further out HSBC sees potential downside risks in 2024 with the dissolution of the 2M Alliance, officially from the start of 2025, which could result in intensifyingcompetitionintherunup.

In FY 2023, Deendayal Port, Kandla handled 137.56 MT of cargo marking a growth of 8.23 percent over the 127.10 MT in the previous year, 70% of the cargo handled at Kandla is evacuated by road, while 10% percent by rail and 20% through pipeline. By 2030, the port is expected to report an annual growth rate of 10 percent, doubling its cargo at 267 MT.

It is to be noted that, the Ministry of Ports, Shipping and Waterways as part of its commitment to the development of the Port Sector in India has identified 74 projects worth Rs 57,000 crore under the Sagarmala program in the state of Gujarat. Out of which, 15 projects worth Rs 9,000 crore have beencompleted;33projectsworthmorethanRs25,000crore are under implementation and 26 projects worth Rs 22,700 crore are under development. Central line ministries, major ports, state maritime board and other state agencies are implementingtheseprojects.