GLOBAL container freight rates have continued to decline, weighed down by excess vessel capacity and the fight among carriers for market share, with Drewry's Global Freight Rate Index, published in Container Freight Rate Insight, showing an anaemic 1.7 per cent recovery in October.
The Asia-Europe trade remains severely troubled by overtonnage as a result of an influx of new ultra large containership capacity (ULCS) with no alternative trade route available to them, said the report.
Continuing weakness on east-west trades and cascading tonnage onto faster growing developing market trade routes dragged down the global average, said the report. The index of global spot rates has now lost over 34 per cent of its value over the past 12 months.
More recent data suggests that the decline in headhaul east-west rates has continued over recent week, with Drewry's weekly benchmark rate between Shanghai and the West Med tumbling 18 per cent in the six weeks to December 7.
Meanwhile, Drewry's Shanghai-Los Angeles benchmark rate slumped 16 per cent over the same period, despite a brief recovery at the beginning of November. Pricing on this sector has shown more stability in recent weeks but rates from Shanghai are still an attractive 25 per cent off January's high.
The spate of Asia-Europe peak-season surcharges scheduled for the end of December suggests that carriers are wilfully ignoring the increasingly bad economic news coming out of Europe, said Drewry.
Low shipping rates remain driven by an oversupply of capacity. World container port throughput increased eight per cent year on year in September, suggesting that demand remains relatively buoyant despite the economic gloom.
Container shipping remains very much a buyer's market with rich pickings for shippers coming into the annual contracting season. Given faltering global demand, the level of overcapacity and carriers' continued penchant for chasing market share, Drewry does not expect rates to recover notably in the near term.