Cargo shipping rates around the world will likely fall for the second consecutive year in 2007 due to intensifying competition among shippers amid high oil prices, the South Korean government said Monday.
While shipping capacity worldwide is expected to come to 10.7 billion TEUs this year, up 13.9 percent from the previous year, the amount of container cargo to be handled will likely come to 485.1 million TEUs next year, up 9.7 percent on-year, the Ministry of Maritime Affairs & Fisheries said. TEU stands for a 20-foot equivalent unit.
"Overheated competition among shipping firms to take a bigger share of the market will drop cargo moving rates and reduce profitability," Lim Jin-su, a researcher at the Korea Maritime Institute said in a statement.
Lim added that if shipping firms successfully cut down on the number of service routes and ships in operation, the downward trend could be reversed.
The ministry forecast that competition among companies to secure ultra-large cargo carriers and to win markets for coastal water shipping could further push shipping rates lower next year.
While shipping capacity worldwide is expected to come to 10.7 billion TEUs this year, up 13.9 percent from the previous year, the amount of container cargo to be handled will likely come to 485.1 million TEUs next year, up 9.7 percent on-year, the Ministry of Maritime Affairs & Fisheries said. TEU stands for a 20-foot equivalent unit.
"Overheated competition among shipping firms to take a bigger share of the market will drop cargo moving rates and reduce profitability," Lim Jin-su, a researcher at the Korea Maritime Institute said in a statement.
Lim added that if shipping firms successfully cut down on the number of service routes and ships in operation, the downward trend could be reversed.
The ministry forecast that competition among companies to secure ultra-large cargo carriers and to win markets for coastal water shipping could further push shipping rates lower next year.