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Freight rates increased 11.0% in Q3 driven by an increase in US goods consumption
Upon the publication of its Q3, 2020 results, Maersk provided a market update. Global container volumes increased by around 1.0% in Q3 2020, showing a faster rebound from Q2 than expected earlier in the year. Continued reopening of the global economy as COVID-19 restrictions were gradually lifted, combined with massive public stimulus packages, drove activity and trade higher. Moreover, country lockdowns weighed more heavily on services consumption than on goods consumption, supporting container trade.
East-West container volumes grew 3.0% in Q3, compared to the same period last year. North American imports from Far East increased by 17.0%, led by an excessive spike in US goods consumption such as electronics, white goods and furniture, and fuelled by a housing boom and generous fiscal stimulus. European imports from Far East also increased, although at a slower pace of 2.0%, while Far East imports from North America and Europe showed a negative development in Q3. North-South container volumes declined 4.0%, while Intra Regional trade volumes, led by Intra Asia, grew nearly 2.0%.
At the end of Q3, the nominal global container fleet stood at 23.7 million TEU, an increase of 2.8% on Q3, 2019. 330,000 TEU (42 vessels) were delivered during Q3 and 53,000 TEU (27 vessels) were scrapped. The relatively strong uptick in demand compared to Q2 resulted in less blanked sailings and additional services being added, reducing the idled fleet to 2.2% of the fleet (0.5 million TEU) by the end of Q3. The effective fleet capacity decreased by 2.0% compared to Q3, 2019. The activity in the new building market remained low, and only 24,000 TEU (14 vessels) were ordered in Q3. At the end of Q3, the orderbook-to-fleet ratio had fallen to 8.2%.
Freight rates, as measured by the China Composite Freight Index (CCFI), increased by 11.0% in Q3, 2020 compared to Q3, 2019 supported by the increase in US goods consumption, container equipment and vessel shortages.
Bunker fuel prices increased in Q3 compared to Q2, with HSFO, VLSFO and LSMGO prices increasing from Q2 to Q3 by 23.0%-33.0% and 24.0%-36.0% in Singapore and Rotterdam, respectively, according to Ship & Bunker prices.
Looking ahead, Maersk warned that the outlook remains uncertain as the number of corona infections are again increasing. The development in container trade will be determined by actions to contain the virus spreading, combined with continued fiscal support to households and businesses.