Container freight rates fell sharply in March and are now well below their range of the past two years, data from Container Trade Statistics (CTS), the UK-based consultancy, has shown.
Its freight index that includes both spot and contract rates fell two points to 79 in March. It had remained stable at 81 points in February following a one-point drop the month before and another in December 2014.
The index is now well below the 83-87 point range, in which it had traded from April 2013 to September 2014, for the third consecutive month, CTS data shows.
The situation has not improved since then. “Falls in freight rates have continued in April, with the rates 12% lower than in March and at record low levels,” Jacob Pedersen, shipping analyst at Sydbank in Denmark, said earlier this week.
“The record low rates highlight brutal overcapacity, compounded by non-existent discipline in pricing in the middle of the low season,” he stated in a monthly report on the shipping markets.
General rate increases of USD700-1,000 per teu that carriers have announced to take effect from the beginning of this month will provide a new test of the carriers’ negotiating position. “Should success with the rate increases fail to take place, a lot would indicate that the fall in rates for [the full year] 2015 will be greater than what we had foreseen in the sector,” Pedersen said.