Container freight rates fall, indicate further pain for lines likely
Monday, 9 December 2013 00:00
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Reuters: Container shipping rates fell for a fourth consecutive week in the week ended on Friday, and Maersk Line and other shipping companies can expect further headwinds in 2014, shipping analysts said.
The Shanghai Containerised Freight Index showed rates on routes from Asia to Northern Europe dropped 7.2% to $ 1,000 per 20-foot container (TEU).
The container shipping industry has been struggling with overcapacity because of too many vessels and too few goods to transport as a result of the economic downturn.
“A pressurised spot market, combined with annual fixed rate deals already being discussed well below $ 1,000 TEU, will in all likelihood result in another challenging year ahead,” broker Freight Investor Services wrote in a note to clients on Friday.
A rate increase of $ 750 per TEU implemented on 1 November has been eroded by almost 60% in just one month.
In the week to Friday, container freight rates dropped by 9.7% to ports in the Mediterranean, by 4.4% to ports on the US west coast and by 4.6% to ports on the US east coast.
Maersk Line, global market leader with nearly 600 container vessels and part of oil and shipping group A.P. Moller-Maersk, has said it will attempt to hike rates on routes from Asia to Northern Europe by $ 750 per TEU with effect from 15 December, a 75% increase if successful.
Competing liners such as Israel Corporation-controlled Zim Lines, Chinese Orient Overseas Container Line , Korean Hanjin Shipping and German-based Hapag-Lloyd have also announce rate hikes with effect from mid-December.
“If the announced Dec. 15 GRI (general rate increase) does not lift rates, they could fall to cost breakeven by year-end, which will raise question marks about forecasts for 2014,” Nordea Equity Research wrote in a note to clients.
