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Asia-Europe Container Shipping Rates Jump Nearly 10 Percent

Reuters
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July 26, 2013

CMA CGM Marco Polo in Hamburg.

reuters logoCOPENHAGEN, July 26 (Reuters) – Spot container shipping rates from Asia to Northern Europe jumped more than nine percent this week after three weeks of drops, data from Shanghai Shipping Exchange showed on Friday.

The Shanghai Containerized Freight Index rose to $1,360 per 20-foot container on Friday from $1,240 a week ago, but remains below its 2012 average of $1,378.

The container shipping industry has struggled to turn a profit in recent years due to overcapacity and the global economic slowdown, which has kept demand weak.

Analysts said the freight rate jump was good news for Danish conglomerate A.P. Moller-Maersk, which owns the world’s biggest container shipping company.

“We are hearing reports of a lack of space and vessels utilised to 97 percent so at the moment at least it’s looking strong,” said Richard Ward, a container derivatives broker at ICAP Shipping in London.

Freight rates nearly tripled in June from depressed levels but fell back sharply in July,.

Shipping analyst Jacob Pedersen from Sydbank called the big jump in freight rates this week exceptionally good news.

“It supports our expectations that Maersk Line will be able to lift profit this year,” Pedersen said. Still, he said, the supply and demand balance still is fragile.

Capacity in the market is expected to increase by 10 percent this year as firms take advantage of depressed yard rates and buy bigger and more fuel efficient vessels, analysis company SeaIntel said.

Indeed, Maersk Line took delivery of the first of 20 new mega container ships earlier in June and expects another four vessels from South Korea’s DSME this year.

To boost profitability, Maersk Line plans to raise freight rates by $300 per 20 foot container from August 1.

At 1027 GMT, Maersk shares were trading down 0.7 percent on the Copenhagen stock exchange. (Reporting by Ole Mikkelsen; editing by James Jukwey)

(c) 2013 Thomson Reuters

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