Bulk shipping freight rates have been falling since the last two years and now have reached the lowest level.
The prevailing freight rates are remarkably low to benefit importers in import dependent economies, like India.
The drastic fall in shipping freight rates is attributed mainly to the availability of excessive vessels and shrinking global trade. Economic slowdown in China, the world’s largest importer as well as exporter of several commodities, has lowered commodity trading in several countries. This has resulted in over-supply of vessels vis-à-vis cargoes. Moreover, the devaluation of the Chinese currency, initiated in Aug’15, has also been supplementing to the bearish atmosphere in the cargo shipping industry.
Presence of surplus vessels has unleashed tough competition among cargo ship owners, another factor contributing towards falling freight rates.
Speaking exclusively to SteelMint, the Director of the Indian National Shipowners’ Association (INSA) said,”Shipping freight rates have been impacted by the number of freight ships outnumbering cargoes.”
Negating the prospect of any improvement in freight rates in the future, he further said that given the economic conditions, there is no prospect of any gain in shipping freight rates at least for this year.
Current freight rates
| Origin | Indonesia | Australia | South Africa |
| Destination | India | India | India |
| Feb’16 | 3.15 | 5.4 | 5.2 |
| Jan’16 | 3.4 | 5.9 | 5.5 |
Source: SteelMint Research
Source: SteelMint Research
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