Shipping horizon brightening

Shipping horizon brightening

The global shipping downturn seems to have ended with freight rates recovering to near-breakeven levels, but it could be years before
the industry returns to pre-recession levels.

Nevertheless, share prices have rebounded sharply on hopes that improving global trade and Chinese demand could help these companies recover speedily.

Cosco, China’s largest shipping conglomerate, said that it raised container freight rates three times from July to September this year. The rates are now near breakeven levels.

"The first and second quarters were the most difficult and now the whole economic situation is moving in a positive direction," a Cosco official said.

Maersk Line, the world's biggest container shipper and a unit of A.P. Moller-Maersk, expects container shipping freight rates to reach breakeven levels by the first quarter of next year.

The Baltic Exchange’s main sea freight index, which tracks rates to ship commodities such as iron ore, coal and grain, hit a two-month high on October 19 at 2,766 points compared with its May 2008 peak of 11,793.

The imbalance between supply and demand is expected to persist for several years, weighing on earnings. And many shippers are burning cash quickly, which will make it difficult to pay for ships that they had ordered in better times.

Source : Exim News Service - Hong Kong, Oct. 22