A sharp fall in the container spot rates last month indicates that there is no discipline in pricing in the industry in its low season and suggests a weaker than foreseen 2015, a senior analyst said.
“Falls in freight rates have continued in April, with the rates 12% lower than in March and at record low levels,” said Jacob Pedersen, shipping analyst at Sydbank in Denmark.
“The record low rates highlight brutal overcapacity, compounded by non-existent discipline in pricing in the middle of the low season,” he said in a monthly report on the shipping markets.
General rate increases of USD700 to USD1,000 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,” he said.
In such a case, the carriers should pay even greater attention to optimising their networks and to control of capacity and to lay up tonnage, he concluded.
This post was sourced from IHS Maritime 360: View the original article here.