Weak global markets, softening crude oil prices pull shipping rates down to all-time low.
Container shipping freight rates in the week ended Friday have fallen further, owing to a lack of cargo support, while dry bulk rates stayed at an all-time low witnessed last week, analysts and brokers said.
Last week, dry bulk freight rates had plunged to a record low, 55 per cent down from a month ago on the India-Europe route in line with weak global commodity markets and softening crude oil prices.
“The global commodity and shipping freight market situation is so bad that we dread another about 50 per cent crash in basic freight rates in the coming weeks,” said analyst K Suryanarayan at Ocean Lines (India) Maritime.
As many as 14 container ships, with carrying capacity of 5,000-8,500 containers each, were laid up in Hong Kong, Singapore and Shanghai after owners failed to find cargo, said a member of the Indian National Shipowners Association.
A container freight broker said most ships are either sailing empty or have been anchored, languishing for enough cargo to at least meet the ships’ operational costs and sailors’ wages.
In the dry bulk market, overseas freight brokers are waiting with fingers crossed, worrying when the current global financial crisis would end.
Kishore Parekh, a broker at Pitamber Laljee & Sons, said, “I fail to figure out how, when and to what extent the shipping industry would recover, if at all it is to recover.”
Global scenario
In the dry bulk market, regarding the Handymax size ship freight rates, Oslo-based independent analysts Astrup Fearnley said in the Atlantic sector the underlying tone remained weak.
“Rates in the East remained at very low levels for spot tonnage — with a ship Jin Quan with 51,104 dead weight tonnage chartered at $2,700 a day for a voyage from the Philippines to China.”
There are more enquiries, which show industry players believe the market has bottomed out, said Astrup Fearnley. On chartering Panamax size ships, the rates remained unchanged from the last week, quiet with many vessels and few cargoes.
Astrup Fearnley also said Capesize ship chartering continues to witness zero activity, and that there is simply no spot market.
Shipowners are realising that firm cargoes are almost impossible to find and a large number of ships, “guestimated around 100”, are kept in waiting positions, mostly in the Far East, Astrup Fearnley added.
Crude oil tankers
Shipbrokers see a ray of hope in the very large crude carrier (VLCC) chartering market.
“The cost of hauling crude oil from the Persian Gulf to Asia, which has come down by 72 per cent in FY09, may turn around this week, with refineries booking more ships this month,” said a report by Paris-based shipbroker, Barry Rogliano Salles.
Refineries probably need to find about 35 more VLCCs at West Asian ports this month alone of a total overall requirement of about 105 ships, it said.
