Reuters: The world’s container shipping market may remain bleak for the rest of the year, after seeing shipping rates halved in the third quarter as western buyers tighten their purse strings amid growing fears of a global recession, an expert said last week.
“We can’t see any major factors that can help stimulate U.S. economic recovery and Europe’s situation is even worse,” said Sunny Ho, Executive Director of Hong Kong Shippers Council, which represents main exporters in Hong Kong – a major international shipping centre.
“The emerging markets have grown faster than the European and U.S. markets, but they are unable to make up for the weak demand in traditional markets of Europe and the States,” he told Reuters in a phone interview.
The Shanghai Containerized Freight Index (SFCI) for European routes tumbled 56 percent to an average of $807.86 per 20-foot-equivalent unit (TEU) in the third quarter from $1,842.67 the same period last year.
Average container shipping rate from Shanghai to U.S. West Coast fell 40 percent year on year to $1,639.93 during the same period, according to BOCOM International, which tracks the indexes complied by the Shanghai Shipping Exchange.
The SFCI serves as a barometer for global trade as it tracks the rates of shipping companies that mainly moves manufactured goods such as shoes, clothes and furniture from the world’s factory of China to consumers in western countries.
Shares of Hong Kong-listed container shipping firms have lost more than half of their market value so far this year, underperforming a 27 percent drop in the blue chip Hang Seng Index .
China COSCO Holdings , the country’s premier shipping firm, dropped 6.8 percent on on Monday and Orient Overseas (International) Ltd ended down 3.5 percent. They have dived 63 percent and 60 percent, respectively, this year.
“We will start to see ship owners idling their ships again,” said Ho, adding that a worsening industry glut will depress shipping rates further and push more container shipping companies into the red.
Indicating faltering western demand, many container shipping companies still sit on extra capacity this month, traditionally a peak season due to Christmas orders, and they are finding it increasingly hard to impose peak-season surcharge, said Geoffrey Cheng, an analyst at BOCOM International.
“Shipping rates are expected to fall further in the fourth quarter,” he said.