Container freight rates fell in August after two months of gains and came close to their 20-month low, according to figures released by UK-based Container Trade Statistics (CTS).
The company’s freight rate index, which covers both spot and contract rates, dropped by two points to 77 in August, reversing a two-point gain the previous month and a one-point gain in June. The index is now only one point above May’s 74-point reading, which is the weakest figure since the start of 2014, according to the CTS website.
A senior shipping analyst warned last week that the industry was experiencing the highest capacity growth on record at the same time as the demand side would remain weak.
“The lack of European demand is of concern,” said Peter Sand, chief shipping analyst at Denmark’s BIMCO, in a container shipping market report emailed to IHS Maritime.
“In the short term, this is because container shipping is a low-margin business and industry profitability requires sustainable freight rates on high-volume trades. In the long term, half of all new ships are bound for a future on the Asia-to-Europe trading lane, cascading the present workhorses onto other trading lanes. 2015 will see a new record inflow of newbuilt tonnage. BIMCO forecasts close to 1.6 million teu will be delivered by the end of 2015. This marks the highest inflow of new capacity ever.
“As the record settles, it will be done by fewer than 200 ships. The trend is strong, as 436 ships were needed to reach 1.502 million teu in 2008.”