Executive Briefings

East-West Freight Rates to Drop as Capacity Outstrips Demand, Drewry Says

Drewry Maritime Research is forecasting average east-west ocean freight rates will fall 20.8 percent this year from 2010 as the addition of ship capacity outpaces growth in demand.

"Carriers have got it wrong this year and there has been an unwelcome and very quick return to the massive freight rate volatility so loathed by the shipper community," the London-based consulting firm said in its latest quarterly Container Forecaster.

Pricing for container shipping has been sliding this year while demand by retailers and manufacturers has grown only modestly, with concerns over pressures from faltering economies in the European Union and tepid economic growth in the United States cutting into consumer confidence.

Vessel overcapacity is so severe even a "decent" peak season will not provide enough momentum to lift deeply eroded freight rates in the key east-west trade lanes, Drewry said.

Drewry says "container operators will find it a very challenging environment this year in which to make money," even though the London firm is forecasting 8.1-percent growth in global container traffic for 2011.

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Drewry Maritime Research is forecasting average east-west ocean freight rates will fall 20.8 percent this year from 2010 as the addition of ship capacity outpaces growth in demand.

"Carriers have got it wrong this year and there has been an unwelcome and very quick return to the massive freight rate volatility so loathed by the shipper community," the London-based consulting firm said in its latest quarterly Container Forecaster.

Pricing for container shipping has been sliding this year while demand by retailers and manufacturers has grown only modestly, with concerns over pressures from faltering economies in the European Union and tepid economic growth in the United States cutting into consumer confidence.

Vessel overcapacity is so severe even a "decent" peak season will not provide enough momentum to lift deeply eroded freight rates in the key east-west trade lanes, Drewry said.

Drewry says "container operators will find it a very challenging environment this year in which to make money," even though the London firm is forecasting 8.1-percent growth in global container traffic for 2011.

Read Full Article