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Asia-Europe freight rates plunge.

On August 25 last, we had expressed apprehension that there were ominous signs of shipping drifting into recession. Our apprehension, it now appears, is proving to be true. According to recent reports in the Lloyd’s List, the freight rates in Asia-Europe trades have crashed to record lows as consumer spending declines. A 20-ft container (TEU) can now be shipped from Hong Kong to Hamburg for as little as $350, excluding surcharges, compared to $1,400 a TEU last summer. The charter rates too have plummeted as the worsening global economic outlook leaves lines very much in the lurch. Hong Kong’s OOCL, it is reported, has snapped up a bargain, fixing a 1679-TEU 2000-built vessel for just $10,500 a day for six months. Even in August, the rate was much higher. The problem has been compounded by signs of commercial insolvencies. A detailed analysis of the Asia-Europe trade by some experts suggests that at least five dozen post-Panamax containerships are potentially surplus in relation to their requirements and may have to be laid up if the demand continues to stagnate. There are rumours that new building orders may be cancelled. Credit is difficult to obtain now following the international banking meltdown. The lines are redeploying tonnage and tapping new markets in their desperate bid to restore normalcy. As the rates decline, the shippers fear, the lines will be inclined to levy additional charges to cover their losses.

OUR BUREAU

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