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Container Shipping Rates Dip: Challenges and Expectations for the Peak Summer Season

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CONTAINER SHIPPING RATES DIP: CHALLENGES AND EXPECTATIONS FOR THE PEAK SUMMER SEASON

This week marked a further slump in the spot rates of container shipping lines. The trend from the previous week, when Drewry’s World Container Index registered a major dip in the average rate for the Asia-North Europe route, continues to intensify.

The average rate for the Shanghai-Rotterdam route has also seen a significant drop. Shippers can now have a 40″ foot container transported from China to Rotterdam at a notably lower cost than a week ago.

Despite increased operating costs, shipping companies have been compelled to sail under cost price, with the market demonstrating no sign of a turnaround. The lack of profitability isn’t confined to the Asia-North Europe route; it extends to larger shipping areas like Shanghai-Los Angeles and Shanghai-New York. The World Container Index, in its entirety, has shown a decrease this week, taking the average global container rate down.

One exception is the Asia-Mediterranean trade, which already had a higher rate than to Northern Europe and saw a small increase this week. Experts in shipping lines are yet to find a clear explanation for this rate difference. Lars Jensen, a Danish container shipping observer, labels the stability of the Mediterranean rate as “unusual”.Also, Drewry thinks that spot rates will be higher on most routes in the coming weeks. This suggests that a turning point may have been reached.

Summer is typically the peak season for container shipping companies. As we move towards this time, the industry often faces more work. They need to transport additional cargo to prepare for the western holiday season. This, however, didn’t pan out last year, when container prices experienced a drastic downturn.

Source: NT