Upply - Market insights

Transatlantic Corridor: Maritime freight rate levels remain high

Written by Jérôme de Ricqlès | July 30 2019

As current affairs take precedent, we are obliged to return to the transatlantic corridor a few days after the appointment of Boris Johnson as Prime Minister of the United Kingdom.

The volume of freight traffic leaving the United Kingdom is currently lower and more fragmented than that leaving continental Europe, which explains why the prices are substantially higher from UK ports, as is shown by our Upply data on the routes Le Havre / New York and Southampton / New York.

A transport capacity kept under control and an abnormally high level of demand during the summer period explain this market trend.

Historical view on average rates (Port to Port with THC) estimated by Upply over the past 24 months – Last update : July 24th, 2019

Draft UK-US Trade Agreement

Against the backdrop of the issues to be faced after the holidays, all eyes are turned to the actions of Boris Johnson, given his clear positions in line with those of the US president Donald Trump.

It is not unrealistic to imagine that in order to exert a real influence in future renegotiations with the EU, the new pairing of Johnson / Trump will "come out fighting" with a draft bilateral preferential agreement. Such an agreement, if it comes into being, could potentially disadvantage continental Europe in terms of exports to the United States, if only by the powerful impact of its announcement.

A risk for continental ports

On a practical level, there could be an "offloading" effect of continental European goods that will be re-labeled as being from the United Kingdom to circumvent customs barriers at entry to the United States.

English ports would be the winners in this market segment, to the detriment of continental European ports. The small vessels used on this trade route offer versatility and flexibility. Furthermore, the ports of the United Kingdom allow a wide choice, without resorting to additional investments.

Photo : @Pixabay