Present high season in container shipping has not been strong enough to support freight rates and it is questionable whether the capacity cuts that alliances of lines have unveiled will be enough to support them either, a senior shipping analyst said.
“Spot freight rates fell by 10% in September on August after very limited success with rate increases on 1 September,” said Jacob Pedersen, shipping analyst at Sydbanken in Denmark.
The rates are flirting with historic lows in Asia-Europe trades and values of second hand tonnage have dropped marginally in the course of last month.
“The fact that the (freight) rates continue to flirt with the lows seen in the summer highlights a continued, very weak balance in the market,” Pedersen said in a monthly review of the shipping markets, adding that this was an indication of insufficient demand for capacity despite the high season.
“Alliances have unveiled capacity cuts for the next few months ahead. However, we doubt whether they will be enough to, but it is important that the rates should find support,” he pointed out.
“Furthermore, we note that there is a lot of eagerness at many owners to order newbuildings in an effort to improve economies of scale by ordering large ships. This can retain the market out of balance for longer than so far anticipated.”