Monday, 24 February 2014 00:00
Freight rates drop by a further $ 146 on Asia-Europe
Rates could well be under $ 1,000 per TEU by end of March: analyst
COPENHAGEN (Reuters): Shipping freight rates for transporting containers from ports in Asia to Northern Europe fell 10.6% to $ 1,233 per 20-foot container (TEU) in the week ended on Friday, a source with access to data from the Shanghai Containerised Freight Index told Reuters.
It was the seventh consecutive week with a price fall on the main trade route. Last week, rates on the worldâ€™s busiest trade lane dropped 12%.
â€śAt current levels of erosion, rates could well be under $ 1,000 per TEU by the end of March causing yet more cash burn for the majority of liners,â€ť Richard Ward, a container derivatives broker at Freight Investor Services, wrote in a note to clients.
Some container shipping companies are expected to try to limit losses by announcing rate increases, but it looks like these will be ineffective, he added.
The container shipping industry has been struggling with over capacity because of too many vessels and too few goods to transport as a result of the economic downturn.
In 2013, the average rate on the busy route between Asia and Europe was $ 1,090.
Maersk Line, global market leader with nearly 600 container vessels and a part of oil and shipping group A.P. Moller-Maersk , has a market share of around 20% on the route between Asia and Europe.
The Danish shipping group will report its fourth-quarter and full-year reports on Thursday. The trade publication Shipping Watch wrote on Thursday that the head of Maersk Line, Soren Skou, has encouraged employees to celebrate its soon-to-be-revealed 2013 earnings.
After the first nine months of 2013, Maersk Line was among only a handful of container shipping firms that posted a positive operating margin.