Signs of global economic slowdown seen in falling freight rates


The cost of shipping a container from key manufacturing bases in Asia to the major consumer market of Northern Europe, the world’s busiest shipping route, fell for a fourth consecutive week in another sign of a slowdown in Europe’s stumbling economic recovery.

Freight rates fell 10.2% to US $738 per 20-foot container (TEU) in the week ended on Friday, according to a Reuter’s report, which cited a source with access to data from the Shanghai Containerised Freight Index.

Reflecting the generally negative economic outlook for the European Union and the wider global economy generally, A.P. Moller-Maersk CEO Nils Smedegaard Andersen has warned that freight rates will continue to decline in the near future.

“Everyone is hoping for the opposite but they are unrealistic in my opinion,” Smedegaard said at a shipping industry event in Copenhagen last week. “We will see gradually declining rates and it will continue to be a very tough business to be in.”

A.P. Moller-Maersk owns Maersk Line, the largest shipping company in the world with a fleet of more than 600 ships, which recently entered into a major ship-sharing deal with MSC to apparently offset the cost of reduced freight traffic, which forces some ships to be operated without a full cargo.

Several of the biggest container shipping companies have announced they intend to raise freight rates, but they have had little success. Following the announcement of the Maersk and MSC partnership, some freight forwarders in Asia, particularly China, have voiced concerns about price fixing in the market.

A.P. Moller-Maersk’s container shipping arm Maersk Line was one of the few in the sector to make a profit last year, maintaining a seven-quarter run of growing sales figures.

Source from : Big News Network