Container freight rates on the key Asia to North Europe route dropped 18 percent since the start of the year as overcapacity continues to take its toll on the shipping industry, said Xeneta, a Norwegian company tracking transport data on 1,700 trade lanes.
Average rates for standard 20-foot containers fell to $1,233 today from $1,498 on Jan. 1, while prices for 40-foot boxes dropped 20 percent to $2,163, according to Oslo-based Xeneta, which was founded last year. The company collects data from more than 50 freight sellers and buyers such as logistic companies, food retailers and steel producers.
The arrival of a new generation of container ships and falling demand for seaborne goods is increasing freight capacity as the euro area remains mired in recession. Operators in Germany have the world’s largest container shipping fleet and are therefore among the most affected. Rates for 20-foot containers slid 55 percent this month, compared with a year ago, while prices to ship 40-foot containers have declined 44 percent in that time, according to Xeneta.
“The current freight rate is loss-making for all players in the industry and certainly it cannot sustain rates like this forever,” said Peter Sand, the chief shipping analyst at shipping association Bimco in Bagsvaerd, Denmark.
Mediterranean Shipping Co., the world’s second biggest container liner by capacity, on May 21 announced a general rate increase of $750 per 20-foot container from July 1 on the Asia to Europe route, while Germany’s Hapag-Lloyd AG, the world’s number six, announced a $1,000 increase for the same route and period on May 14.
Thomas Wybierek, a shipping analyst at Norddeutsche Landesbank Girozentrale in Hanover, said he doesn’t expect a repeat of the price war that depressed rates in 2011, “when companies tried to undercut each other to keep their share of the market.”