Welcome Guest | |
Submit Your Sourcing Requirement
Advanced Search Filtersdown arrow
left border  
NEWS
left border  
Last Updated:[01-09-2009 08:46:37 EDT] Zoom in Zoom out Back to Tradenews

Free Fall in Shipping Rates to Devastate Industry



tradenews A Bloomberg survey by six analysts and fund managers predicts that the rate for leasing capesize vessels will reach as low as $18,000 from its current price of $37,865 per day. It should be recalled the rates for capsize ships or ultra large vessels reached an all time high of $234,000 a day in June last year as demand for commodities rose exponentially in the global market.

However, after reaching a high of about 12000 at Baltic Dry Index (BDI), a scale to assess global trade and freight rates, the market collapsed within the next quarter to hit the low as international trade diminished with fears of global downturn. The survey forecasts the shipping industry is in for more problems with China’s likely reduction of raw-material imports and entry of many pending new ships into the freight arena.

Although many developed countries and emerging economies are showing mixed signs of recovery, the shipping rates are heading for lower operational cost. If global trade does not take off from here on, the shipping industry will have more troubles particularly due to the infusion of 146 capesizes to the existing fleet this year, equal to 28 percent of the fleet, according to Fearnley Consultants A/S. BDI which includes four types of vessels including capesizes, more than tripled this year.

Nippon Yusen K.K of Japan, one of the largest shipping companies has forecast its first full-year loss in 23 years last month, citing lower demand for container shipping. Similarly, China Cosco Holdings Co., another large operator has reported that its commodity ships had lost money in the first half. Rates for capesizes have witnessed huge swings, more than 50 percent several times in the past eight years.

London-based Drewry Shipping Consultants Ltd claims that even at rates of $18,000 a day, most owners should make money, with daily operating costs estimated at $7,555. If world economy rebounds it will largely benefit the shipping industry as ships carry about 90 percent of world trade.

The latest data from the Netherlands Bureau for Economic Policy Analysis indicate the global trade rose 2.5 percent in June. Nevertheless, fears persist on the full recovery of the global economy as some economists envisage that it would take a long time to see V-shaped rebound.

By Jose Roy




What do you feel about this Trade News?
Feel free to write COMMENTS
*Name:
*Your Email Address:
 Website
*Your Message:
Please refresh the screen if you
can't read the following text
Captcha
*Enter above security code : 
 

Delicious.com Digg.com Facebook.com Google.com/bookmarks Yahoo! Bookmarks reddit.com



 
 
PREVIOUS