In the first installment of a new quarterly report released today by London-based Drewry Shipping Consultants, the company says that decreases in freight rates will have a significant affect on the container shipping marketplace.

The report, dubbed ?Container Shipper Insight,? says that double-digit freight decreases in containers coming from Asia will have a significant effect on the market while shippers and carriers get set to negotiate freight rates for the high volume peak season that begins this summer.

Data used in the report was provided by freight forwarders in the United States, China, and Europe, according to Philip Damas, Drewry?s lead researcher for the report. This data was based on freight forwarders? transactions with shippers that accounted for several hundred millions dollars worth of ocean freight, according to Damas.

While Damas could not disclose how many freight forwarders provided data, he did say the numbers are reflective of what is currently happening industry-wide, in regards to the double-digit decrease.

Some of the report?s highlights included:

* Hong Kong to Long Beach spot freight rate declined by 13 percent, or $1,600 per 40-foot container for low-cost carriers.
* Freight rates from China to Northern Europe and the Mediterranean fell by 14 percent and 10 percent, respectively, with cargo moving from Hong Kong to as low as $750 per container.
* Service contract freight rates in Asia to North America trade will decline by 10 percent this year, although there will be higher bunker surcharges.

The main reason for the precipitous decline in container freight rates, according to Damas, is increased shipyard activity.

?There has been a record level of ordering new vessels from the world?s shipyards, and they are being delivered this year and next year,? said Damas. ?This industry is in a three-year boom phase, and now the situation is moving towards over capacity?which is driving this decrease.?

Impact for logistics
The figures disclosed in this report carry weight for logistics managers, said Damas.

?For every logistics manager, the two key variables both for international logistics and global logistics are the costs of logistics and the on-time delivery of operations,? said Damas. ?And with the data we put together we hope it will clarify underlying market trends for the cost of international cargo shipments.?

There is also a second aspect of logistics costs that keep going up worldwide, he added, and the international ocean shipping area is one segment where they can have relief because the costs are going down.

For more information on Drewry?s ?Container Shipper Insight? report, go to www.drewry.co.uk

Source: Logistics Management, Jeff Berman, Senior Editor

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