First Ocean Freight Rates Collapse to “Zero,” China Freight Index Plunges to Record Low, Bailouts...

[marmar]

First Ocean Freight Rates Collapse to “Zero,” China Freight Index Plunges to Record Low, Bailouts Loom
by Wolf Richter • March 28, 2016


[font color="blue"]The next stage of “Moral Hazard?”[/font]

The amount it costs to ship containers from China to ports around the world has plunged to historic lows. As container carriers are sinking deeper into trouble, whipped by lackluster global demand and rampant oversupply of container ships, they’re escalating a brutal price war with absurd consequences.

Maritime research and advisory firm Drewry (emphasis mine):

Recent news stories, backed up by anecdotal stories told to Drewry, report that carriers have quoted zero dollar freight rates to some forwarders on certain lanes out of Asia. Whether these are merely isolated cases or something more widespread is difficult to judge at the present time, but whatever the exact quantum, there is no denying the container rates are now close to the historic lows as seen in 2009.

The World Container Index, an average of spot freight rates on 11 global East-West routes connecting Asia, Europe, and the US, plunged last week to a record low of $666 per 40-foot equivalent unit container (FEU), down 73% from mid-2012!

The China Containerized Freight Index (CCFI) tells a similar story. It tracks contractual and spot-market rates for shipping containers from major ports in China to 14 regions around the world. On Friday, the index dropped 1.6% to 659.19, its lowest level ever! .............(more)

http://wolfstreet.com/2016/03/28/ocean-freight-rates-collapse-to-zero-china-freight-index-ccfi-plunges-record-low-carrier-bailouts-loom/

[pscot]

1. The average container ship built today

has 3X the capacity of the average ship built 10 years ago, so there's that.

[snappyturtle]

2. Thanks marmar for posting this link. I wish candidates were asked more about the economy.

I am seeing reports like this one, real indicators not manipulated numbers, across the globe.
Scares me. I hope whomever becomes President is prepared.

[LiberalArkie]

3. The comments on this article are very interesting.

I’m starting to think that capitalism, while the best of systems, might have some unperceived structural flaws that, unaddressed, slowly cause an unseen rot at the edges it fails to cover. This has now exacerbated to the point where we get all these mystifying phenomena pop up and experts run hither and thither claiming the future holds hyper-inflation while others cry massive deflation. The experts can’t agree and the problem looms ever larger as everyone desperately tries to pin the blame unable to see the root cause.

And to those who say we don’t have real capitalism, I would say that’s true but it’s damned near enough. The problem is not the amelioration of capitalism’s harsher edges.

[elleng]

4. Unregulated capitalism cannot thrive.

[Hotler]

5. Interesting article thanks for sharing. n/t