• Freight rates for dry cargo and container transport started on a limited upward movement from the second half of 2020 onwards. In the first half of 2021, this movement continued. For liquid cargo freight rates, however, no recovery can be gathered from the data.
• Both oil and fuel prices continued their upward trend in the first half of 2021. Fuel prices in IWT rose by 12.5%, from 45.29 €/100L in Q1 2021 to 50.96 €/100L in Q2 2021.
• Throughout the second half of 2021 and in 2022, fuel prices in IWT are expected to lie in the range between 54 and 60 €/100L. The basis for this outlook is oil price forecasts.
FREIGHT RATES IN THE RHINE REGION 1
- In the first half year 2021, gasoil spot market freight rates within ARA-Rhine trade followed a negative trend. This was a continuation of the development that started after the low water period of 2018. One main driving force that puts a strain on freight rates is the ongoing pandemic with its negative influence on mobility and fuel demand. With regard to hydraulicity, freight rates were also not supported, as water levels were rather high, except for a period at the end of April. On the spot markets for oil products, rising prices also delivered negative influences on transport and freight rates. Finally, the term structure on future markets was orientated towards backwardation.
- Statistics Netherlands (CBS) collects freight rate data from a panel of Dutch IWT companies. These data are observed twice a quarter and include fuel and low water surcharges.
- The third quarter of 2020 seemed to be the period when transport prices for dry bulk and container transport stabilised. For subsequent quarters, an upward trend is seen. For liquid cargo, freight rates remained at a low level.
- In the absence of low water levels in the first half year 2021, freight rates were mainly influenced by transport demand. As chapter 1 has shown, transport demand for liquid bulk was decreasing somewhat, while dry bulk and container transport were upward orientated. The development of freight rates per cargo segment reflects these differing trends.
FIGURE 1: FREIGHT RATE EVOLUTION FOR GASOIL FROM THE ARA REGION TO RHINE DESTINATIONS (INDEX 2015 = 100)
Source: CCNR calculation based on PJK International
* PJK collects freight rates (in Euro per tonne) for ARA-Rhine trade of liquid bulk. The CCNR transforms these values into an index with base year 2015. Lower Rhine: Duisburg, Cologne. Upper Rhine: Karlsruhe, Basel. Main: Frankfurt/M.
FIGURE 2: FREIGHT RATE EVOLUTION PER QUARTER FOR DUTCH IWT COMPANIES ACCORDING TO MARKET SEGMENT (INDEX 2015 = 100, QUARTERLY DATA)
Source: Centraal Bureau voor de Statistiek (Binnenvaartdiensten; prijsindex)
FUEL COST EVOLUTION
- Fuel costs are analysed on the basis of gasoil/diesel prices published by the energy price monitoring system of the Belgian Ministry of Economic Affairs2. A comparison with oil prices reveals a very close correlation which serves as a basis for an outlook on fuel prices.
- In the course of 2021, oil prices – and therefore also fuel prices – continued to follow an increasing trend. Oil prices reached US dollars 68.8 in the second quarter of 2021 (approximately 57.3 Euro as the exchange rate was USD/EUR 1.20).
- The US Energy Information Administration (EIA) forecasts – in its latest short-term outlook from September 2021 – Brent crude oil spot prices to average around 72 US dollars per barrel in 2021, and around 66 US dollars per barrel in 2022, compared with an average of 41.8 US dollars in 2020. The IMF oil price outlook points to slightly lower values. This lies in different assumptions regarding the pace of economic recovery and the growth of oil production from OPEC countries and the US3.
- Fuel prices in European IWT are not only influenced by oil prices but also by the exchange rate between US dollars and euros. The depreciation of the US dollar towards the euro, starting in March 2020, continued until May 2021, reaching 1.22 US dollars per euro at the end of that month. This dampened fuel prices in European IWT. In August 2021, the euro lost some value compared to the US dollar due to a weak business cycle in Europe and settled at 1.17-1.18 US dollars per euro until September. It is expected that the European currency will not deviate much from this range throughout 2021 and 202245.
- Based on this reasoning, fuel prices in IWT are expected to remain in the range between 54 and 60 €/100L throughout the rest of 2021 and in 2022.
FIGURE 3: AVERAGE FUEL PRICES ACCORDING TO THE BELGIAN MINISTRY OF ECONOMIC AFFAIRS AND BRENT CRUDE OIL PRICES INCLUDING FORECAST *
Sources: ITB and SPF Economie (fuel price). US Energy Information Administration (oil price). Federal Reserve Economic Data (historical exchange rate US-dollar/euro). 1 barrel (bbl) = 159 litres.
* IMF = International Monetary Fund WEO Update July 2021; EIA = US Energy Information Administration. The forecast assumes a nominal exchange rate of 1.17 US dollars per euro throughout 2021 and 2022.