CONTAINER shipping rates from Shanghai to Europe has dropped more than 60 per cent from US$1,460 per TEU at the outset of the year to $560 per TEU today, largely because of the spreading European debt crisis, says Shanghai Shipping Exchange president Zhang Ye.
Echoing his view, China Shipping (CSCL) assistant general manager Zhang Denghui said Shanghai-to-Europe container freight rates have declined to US$400 per TEU, which can barely cover costs.
"Since the situation of this year is worse than that of 2009, container fleets in China are likely to experience extensive losses," he said, Xinhua reports.
Cosco posted losses of CNY4.77 billion (US$749 million) while CSCL lost CNY1.58 billion in the first three quarters of 2011.
Shipping industry experts say oversupply is another major cause for rate slump.
"Global container cargo volume is estimated to grow four per cent for the whole year, while shipping capacity increases 14 per cent," said Lui Bi, director of the World Economy Institute at Dalian Maritime University. "But the biggest contributor for capacity surplus from foreign carriers, not Chinese carriers."
Although Cosco and CSCL are now ranked among the top 10 carriers in the world, their capacity accounts for only seven per cent of the total. While China's container cargo output composes 20 per cent of the world's total. Most container shipping from China is foreign.
Mr Lui said some international carriers don't have capacity under control, especially, the world's biggest container shipping line, Maersk, which recently ordered ten 18,000 TEU vessels.
