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Container rate weakness will continue into Q4: Alphaliner forecast


ANALYST Alphaliner has forecast that spot container shipping rates will continue to subside in the coming weeks following a tepid peak shipping season.

"With Chinese factories due to close for the October 1 Golden Week holidays, marking the traditional start of the container shipping slack season, carriers have slashed rates ahead of the holidays to build their cargo booking pipeline," said Alphaliner's latest weekly report.

"Further rate weakness is expected for the rest of the year, with carriers' capacity management efforts ineffective so far in stemming the rate decline."

As reported in FreightWaves, World Container Index spot freight rates on the Shanghai-to-Genoa lane plummeted 13 per cent last week, dragging the global composite index down 6 per cent as a result, according to London-based shipping consultancy Drewry.

Alphaliner noted that spot freight rate indices on the Shanghai Containerised Freight Index (SCFI) have slumped to a four-month low and are down 18 per cent year on year - evidence, believes the analyst, that while the slew of container line voided sailings may have helped manage seasonal short-term drops in cargo volumes, they have been ineffective in dealing with a "structural deficit" in demand.

The report said: "Carriers have limited room to keep capacity out of the market for extended periods, as the cost of keeping ships inactive will be substantial, while a steady stream of new ships is still expected to be delivered in the coming months and the scrapping of older ships remain very low."

The rush to fit container vessels with scrubbers ahead of the introduction of IMO 2020 low-sulfur fuels at the start of next year is taking some capacity out of the market.

Blanked sailings and scrubber retrofits pushed up the inactive fleet to 148 units totalling 641,259 TEU of capacity as of September 16, or 2.8 per cent of the total fleet.

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