Danish shipping and oil group AP Moller-Maersk has slashed container freight rates from Asia to the US West Coast by nearly a quarter as the American economy slows, industry sources said last Friday.
'Container shipping rates have came down substantially as demand is very weak and exporters are in deep water,' said Sunny Ho, executive director of Hong Kong Shippers Council.
Container freight rates for Asia to the United States have fallen to as low as US$1,300 a box, he said without naming specific shipping firms.
Sources said that Maersk had cut freight rates to the West Coast to US$1,300 per forty-foot equivalent unit, from US$1,700.
Maersk declined to comment on the report, but said that transpacific rates were under pressure because of the US economic downturn.
'We aim to keep our market share in the Transpacific trade, but undoubtedly, the rates must be increased to create a sustainable environment,' said Maersk Line Transpacific head Vincent Clerc.
China COSCO, a listed arm of the country's largest shipping conglomerate, has followed the cut as slowing trade growth due to weak demand from the US and Europe continues to pressure shipping rates, a source said. He would not specify the amount of the cut.
Analysts expected other regional container line operators, many of whom are operating at losses, to follow.
Credit Suisse said that it did not see the prospect of another up-cycle yet and shipping lines were cutting back on capacity to avoid further losses.
Maersk, the world's top container ship operator, said last Thursday that it was taking eight ships out of service until May or June next year due to poor market conditions.
Each of those ships can carry 6,500 twenty-foot equivalent units (TEUs). Container shipping rates from Asia to Europe have also fallen by about two-thirds to more than US$200 per TEU, Mr Ho said.
'We have some cases where shipping firms are willing to move goods for a zero freight rate and exporters are only responsible for bunker (fuel) and terminal handling charges,' he said.
Mr Ho expected container freight rates to US West Coast to fall further. 'We had seen US$900 all in before.'
Hong Kong exporters reported a 30 per cent year-on-year drop on orders for the peak season next year, he said.
The number of US workers collecting jobless benefits hit a 26-year high last month, data showed last Thursday, and it may head higher as a deepening economic slump forces a broad spectrum of firms to cut jobs.
Economists said that the latest batch of dour news for the world's largest economy pointed to a downturn that could be the sharpest and longest since the downswings in the early 1980s.
The United States is Asia's largest overseas market for its goods, and several export-dependent Asian economies have also slid into recession as a global slowdown spreads.
'Container shipping rates have came down substantially as demand is very weak and exporters are in deep water,' said Sunny Ho, executive director of Hong Kong Shippers Council.
Container freight rates for Asia to the United States have fallen to as low as US$1,300 a box, he said without naming specific shipping firms.
Sources said that Maersk had cut freight rates to the West Coast to US$1,300 per forty-foot equivalent unit, from US$1,700.
Maersk declined to comment on the report, but said that transpacific rates were under pressure because of the US economic downturn.
'We aim to keep our market share in the Transpacific trade, but undoubtedly, the rates must be increased to create a sustainable environment,' said Maersk Line Transpacific head Vincent Clerc.
China COSCO, a listed arm of the country's largest shipping conglomerate, has followed the cut as slowing trade growth due to weak demand from the US and Europe continues to pressure shipping rates, a source said. He would not specify the amount of the cut.
Analysts expected other regional container line operators, many of whom are operating at losses, to follow.
Credit Suisse said that it did not see the prospect of another up-cycle yet and shipping lines were cutting back on capacity to avoid further losses.
Maersk, the world's top container ship operator, said last Thursday that it was taking eight ships out of service until May or June next year due to poor market conditions.
Each of those ships can carry 6,500 twenty-foot equivalent units (TEUs). Container shipping rates from Asia to Europe have also fallen by about two-thirds to more than US$200 per TEU, Mr Ho said.
'We have some cases where shipping firms are willing to move goods for a zero freight rate and exporters are only responsible for bunker (fuel) and terminal handling charges,' he said.
Mr Ho expected container freight rates to US West Coast to fall further. 'We had seen US$900 all in before.'
Hong Kong exporters reported a 30 per cent year-on-year drop on orders for the peak season next year, he said.
The number of US workers collecting jobless benefits hit a 26-year high last month, data showed last Thursday, and it may head higher as a deepening economic slump forces a broad spectrum of firms to cut jobs.
Economists said that the latest batch of dour news for the world's largest economy pointed to a downturn that could be the sharpest and longest since the downswings in the early 1980s.
The United States is Asia's largest overseas market for its goods, and several export-dependent Asian economies have also slid into recession as a global slowdown spreads.