World’s Dry Cargo Transport Rate Nosedives

 

The key shipping freight rates for transporting containers from ports in Asia to Northern Europe fell by 26.7 percent to $469 per 20-foot container (TEU), last Friday. 

 

It was the third consecutive week of falling freight rates on the world’s busiest route and rates are now nearly 60 percent lower than three weeks ago.

 

As expected over the past few weeks carriers have announced their plans to prop up rates come September 1st with all major carriers insisting on a general rate increase of around $1,000 TEU.

 

These significant rate declines can be explained by the latest figures from Alphaliner, which suggest that demand on Asia-North Europe declined 3.5% during the first half of the year, whilst capacity actually increased 3.4%.

 

Analysts point out that the rates generally deemed profitable for shipping companies on the route are at about $800-$1,000 per TEU, but excess ship capacity and sluggish demand for cargo transportation cause prices to decline.

 

However, some transport companies, such as Maersk, assume under those conditions to reduce much the services and declare the tariff for transportation of not less than $1,000 per TEU. 

 

Analysts believe that the result will be the actual freezing of the world’s transport corridors and further collapse of world trade.