David Badger | 29 Nov 2011
Freight rates continued their downward spiral on benchmark containership routes last week, as lines failed to react to growing overcapacity and competition for cargo.
The Shanghai Containerised Freight Index (SCFI) reported declines on services from Asia to Europe and the US west coast, as well as on other trade lanes.
The SCFI reported a US$25 drop over the week for China-US west coast freight rates to $1,435 per feu, below analyst Drewry’s Hong Kong-Los Angeles benchmark price of $1,457 per feu this week.
Asia-Europe trades were down to $511 per teu on the SCFI.
In its monthly Container Intelligence report, London-based Clarkson Research Services said: “Recent withdrawals of capacity from the suffering transpacific and Far East-Europe trades have been undermined by seasonally weak volumes and further economic deterioration in Europe and the US.
“Although volumes on the main trades may well pick up seasonally in the spring, in the medium-term, redeployment of capacity is likely to maintain its impact on the markets.”
The research team also said that it had revised down its container trade projections from the previous monthly report, on account of worsening economic conditions in Europe and the US, which could hit imports into these economies.
Overall, Clarksons estimated that global container trade would increase 8.1% this year and another 8.2% in 2012. However, the containership fleet was also projected to grow by 8.3% this year.
Some questions crossed my mind after reading this:
- Will the laid-up tonnage exceed that of 2009?
- Will this crisis finally lead to a consolidation of the container shipping industry?
- What will be the outcome for shippers and ports?
- What will be the impact on training and safety?I do not have the answers yet. Does anybody want to give a try?