Container freight rates have dropped by an average US$150 per teu (20 ft equivalent unit) in the first half of this year, putting heavy pressure on the profitability of shipping lines, according to a Hong Kong shipping executive.
The Asia-Europe trade has been worst hit, seeing rates drop by $250 per teu, representing a 20 per cent fall compared with the same period last year, Kim Balling, Orient Overseas Container Line's (OOCL) general manager for corporate marketing, said.
He said if the situation continued due to fierce competition and excess capacity in the trade, it would be 'very difficult' for the industry and some lines might even go bankrupt.
Tung Chee-chen, chairman and chief executive officer of Orient Overseas (International), parent of OOCL, said: 'Achieving profitability in this market is an achievement in itself.' He said while OOCL's cargo rose by 19 per cent in the first half against the same period last year, the average revenue per teu fell due to keen pricing competition and an increase in capacity in the industry.
While most shipping lines faced losses, OOIL reported a lower profit of $10.2 million in the first half of the year.
'Our fleet renewal and modernisation programme substantially increases our operating efficiencies,' Mr Tung said.
