Monday, December 8, 2008

Maersk slashes Asia-US container freight rates

HONG KONG: Danish shipping and oil group AP Moller-Maersk has slashed container freight rates from Asia to the US West Coast by nearly a quarter as the American economy slows, industry sources said on Dec 5.

"Container shipping rates have came down substantially as demand is very weak and exporters are in deep water," said Sunny Ho, executive director of Hong Kong Shippers Council.

Container freight rates for Asia to the United States have fallen to as low as US$1,300 (RM4,719) per box, he said, without naming specific shipping firms.

But sources told Reuters Maersk had cut freight rates to the West Coast to US$1,300 from US$1,700 per forty-foot equivalent unit.

Maersk officials in Hong Kong were not immediate available for comment.

China Cosco, a listed arm of the country's largest shipping conglomerate, has followed the cut as slowing trade growth due to weak demand from the United States and Europe continues to pressure shipping rates, a source told Reuters.

But he would not specify the amount of the cut.

Analysts expected other regional container line operators, many of whom are operating at losses, to follow.

Credit Suisse said it did not see the prospect of another up-cycle yet and shipping lines were cutting back on capacity to avoid further losses.

Maersk, the world's top container ship operator, said on Thursday that it was taking eight ships out of service until May or June next year due to poor market conditions. Each of those ships can carry 6,500 twenty-foot equivalent units (TEUs).

Container shipping rates from Asia to Europe have also fallen by about two-thirds to more than US$200 per TEU, Ho said.

"We have some cases where shipping firms are willing to move goods for a zero freight rate and exporters are only responsible for bunker (fuel) and terminal handling charges," he said.

Hong Kong-based container ship operator Orient Overseas (International) has also warned of a grim year ahead.

"The outlook is very pessimistic next year," OOIL Chairman Tung Chee Chen told Reuters this week.

Ho expected container freight rates to US West Coast to fall further. "We had seen US$900 all in before," he added.

Hong Kong exporters reported a 30% year-on-year drop on orders for the peak season next year, Ho said.

The number of US workers collecting jobless benefits hit a 26-year high last month, data showed on Thursday, and it may head higher as a deepening economic slump forces a broad spectrum of firms to cut jobs.

Economists said the latest batch of dour news for the world's largest economy, which fell into recession a year ago, pointed to a downturn that could be the sharpest and longest since the downswings in the early 1980s.

The United States is Asia's largest overseas market for its goods, and several export-dependent Asian economies have also slid into recession as a global slowdown spreads.

Source: Edge Daily.

No comments: