With new container vessel deliveries coming at a time when both the Transpacific and the Far East to Europe trades are weak we believe that the pressures on freight rates will be to downwards if the steamship lines cannot continue to manage their capacity. We have already seen declining spot rates from the Far East and the normal Peak Season Surcharges are not being brought in due to weak volumes. The ability to add to vessel strings is substantially down from last year when vessels were shifted from the Transpacific to the Far East Europe trade lane, which has now resulted in over capacity and utilization that has dropped well below the 90 percent level. At least two steamship lines have shifted capacity into temporary layup by skipping a voyage. This is equivalent to a 63 day lay up.
We do not expect 2008 to be a good year for the container shipping industry and one should expect to read about red ink on the shipping companies' financial accounts as quarter three and four come upon us.
Best regards,
World Trade Service Team
| Neli Moyo Consultant Trade and Transportation Global Insight (USA), Inc.
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(September 15,2008)
