Net freight rates for the transport of high-and-heavy equipment from China to North America have shown a continuing decline through February this year, according to Drewry Supply Chain Advisors.

Total rates per cubic metre (cbm) in February were $118, down from $130 recorded in February 2012, with the bunker adjustment (BAF) at $10, down from $15 for the same month last year. The base figure was $110 per cbm.

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Drewry;s Car Carrier Benchmark Freight Rates between Korea and Europe from Drewry Supply Chain Advisors - www.drewry.co.uk
There are two reasons driving the fall from China to North America, according to Dewry’s business development manager, Martin Dixon. The first is the falling BAF component, which reflects a decline in marine oil prices since the highs of early to mid-2011. In April 2011, BAF was at $35 per cbm, but was half that by October that year. Bunker fuel comprises the bulk of the cost of operating a vessel on long-haul routes.

The second reason for the fall, according to Dixon, has been sluggish cargo demand, which has lowered utilisation rates with the knock-on affect on freight rates.

China confirmed last week that its 2013 GDP growth target has been set at 7.5% after the economy grew 7.8% in 2012, the slowest pace in 13 years.

Freight rates for new passenger cars, meanwhile, have remained steady at $59 per cbm for more than a year now. The last marginal fluctuation was in mid-2011, around the time that the EU-Korea free trade deal was ratified. The EU is South Korea’s second largest trading partner after China, taking almost 20% of its exports. According to the European Commission’s Annual Report on the Implementation of the EU-Korea FTA, South Korean car exports to the EU rose by 20%, or €663m ($865m) in the first year of the deal compared to the average rate, however this amount was still 37% below the 2007 peak.

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