Container shipping rates drop, Chinese New Year gives no relief

Falling shipping freight rates for transporting containers from Asia to Northern Europe on Friday showed there was no traditional surge in cargo exports from China ahead of the Chinese New Year, indicating a bleak outlook for the industry.

Spot freight rates on the world’s busiest trade route have halved since the start of the year after falling 26 percent to $545 per 20-foot container (TEU) this week—a level not considered to be commercially viable for most vessels.

Last year, considered to be a bad one for shipping, average freight rates were $1,098 per TEU ahead of the Chinese New Year and $1,659 per TEU the year before. Rates this year for Asia to Europe have averaged $739.

Most container shipping companies are running with negative margins on their earnings before interest, tax, depreciation and amortisation.
Global sea-borne trade is highly dependent on global growth. The International Monetary Fund (IMF) this week cut its global growth forecast to grow by 3.4 percent this year and 3.6 percent in 2017. Both forecasts were down 0.2 percentage points from the previous estimates made in October.