No silver lining for container shipping in Brexit storm: Xeneta

By Tom Eddershaw - July 5, 2016.

Market intelligence platform Xeneta has said it believes that the UK’s decision to leave the European Union will impact negatively on all parties involved in the container shipping segment – from shippers, to freight forwarders and the container carriers themselves.

“The only thing that is certain right now is uncertainty,” the company said in a statement.

“The last thing the container segment needs is further unpredictability and disruption,” Xeneta CEO Patrik Berglund commented.

“Rates for shipping 40-foot containers have effectively collapsed over the past two years – with the short term average for Shanghai to Rotterdam now standing at 60 per cent below its summer 2014 level. This has been driven by chronic over-capacity and cut throat competition. Now we have Brexit to contend with.”

Berglund said that anything impeding free trade raises costs, but not to the benefit of any of the parties involved in the container supply chain.

“For the last 40-plus years the UK has been part of a mega trading block capable of negotiating the most favourable trade treaties – and therefore import duties – with other blocks and nations.

“Now, all of a sudden, it’s going to have to sign new treaties with everyone, without the bargaining power of the EU in its corner, and that will undoubtedly lead to higher duties, and therefore costs for shippers.”

“Supply chains in today’s globalised trading arena are complex and inter-connected, yet fine tuned to run efficiently, taking the path of least resistance wherever possible. Container shipping is an integral part of this, with all parties relying on smooth operation and predictable deliveries. The Brexit decision is like throwing a spanner in the works of this well-oiled machine.”