Shipping freight rates on the world's busiest route, from Asia to northern Europe, fell by the largest percentage amount since 2008, reflecting wild volatility in the market as vessel operators continue to wrestle with overcapacity.
Rates for transporting containers from Asia to Northern Europe plunged 32.5 per cent to US$444 per 20-foot container (teu) in the week ended yesterday, a source with access to data from the Shanghai Containerised Freight Index said.
Shipping consultants Drewry reckon the Shanghai-Rotterdam and Shanghai-Genoa routes are the two most volatile among 11 that they track, with rates rising US$1,000 or more per teu over just a few weeks and then falling back down again.
"The drop in freight rates is witness to the brutal price competition and there is a need for far more cuts in capacity," analyst Jacob Pedersen from Sydbank said.
Shipping companies such as Maersk have said they wanted to increase rates dramatically on the spot market.
Sometimes they succeed in applying such high freight rates and the index rises as it did by 150 per cent in May.