Intra-Asia freight rates fall to lowest levels since 2011

A slowdown in the Chinese economy and cascading tonnage have caused the decline in rates, according to Drewry.    Container shipping rates on intra-Asia trades have fallen to their lowest level in four years, according to Container Freight Rate Insight, published by the consultants Drewry.
   Drewry’s Intra-Asia Freight Rate Index fell 10 percent in the three months to January 2015 to reach $900 per 40-foot container, its lowest level since the rates were first published in March 2011. The index is a weighted average of spot container freight rates across multiple routes serving intra-Asian trades, excluding South Asia and Middle Eastern trades.
    Ocean carrier OOCL said last month that in the fourth quarter of 2014, liftings on its intra-Asia/Australasia services were 7.2 percent lower than they had been in the fourth quarter of 2013 and revenue on the trade lane was off 6 percent.
   Stijn Rubens, senior advisor at Drewry Supply Chain Advisors, said the company’s intra-Asia index is typically stable, but “is now being impacted by the slowdown in the Chinese economy and cargo demand on these key trade lanes. Shipping lines have also been deploying larger ships and introducing new services, which has only increased the pressure on Intra-Asia freight rates.”
   “We expect the decline in intra-Asian rates to stabilise as trade picks up following the Chinese New Year holiday period,” Rubens added. “But longer term, rates on these routes will remain under pressure so long as carriers continue to cascade unwanted tonnage on these once buoyant trades.”
   The collapse in intra-Asian pricing contrasts with a recovery in global container freight rates over the same period. Drewry’s Global Freight Rate Index, a weighted average across the main deep sea trades, which excludes intra-Asia and intra-Europe trades, climbed 11 percent in the three months to January to reach $2,135 per 40 forty-foot containers.
   Drewry said that the global increase was supported by stronger rates on East-West headhaul trades, but added that pricing on North-South routes, particularly those serving South America and Africa, have weakened in recent months.