{"id":19276,"date":"2016-03-30T10:55:59","date_gmt":"2016-03-30T15:55:59","guid":{"rendered":"http:\/\/olduvai.ca\/?p=19276"},"modified":"2016-03-30T10:55:59","modified_gmt":"2016-03-30T15:55:59","slug":"first-ocean-freight-rates-collapse-to-zero-china-freight-index-plunges-to-record-low-bailouts-loom","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=19276","title":{"rendered":"First Ocean Freight Rates Collapse to \u201cZero,\u201d China Freight Index Plunges to Record Low, Bailouts Loom"},"content":{"rendered":"
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First Ocean Freight Rates Collapse to \u201cZero,\u201d China Freight Index Plunges to Record Low, Bailouts Loom<\/a><\/h3>\n<\/header>\n
\n

The next stage of \u201cMoral Hazard?\u201d<\/strong><\/p>\n

The amount it costs to ship containers from China\u00a0to ports around the world has plunged to historic lows. As container carriers are sinking deeper into trouble, whipped by\u00a0lackluster global demand and rampant oversupply of container ships, they\u2019re escalating\u00a0a\u00a0brutal price war with absurd consequences.<\/p>\n

Maritime research and advisory firm\u00a0Drewry<\/a>\u00a0(emphasis mine):<\/p>\n

Recent news stories, backed up by anecdotal stories told to Drewry, report that carriers have quoted\u00a0zero dollar freight rates<\/strong>\u00a0to 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.<\/p><\/blockquote>\n

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\u00a0a record low of $666 per 40-foot equivalent unit container (FEU), down\u00a073% from mid-2012!<\/p>\n

The China Containerized Freight Index (CCFI<\/a>) 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!<\/p>\n

It has plunged 39% from February last year and 34% since its inception in 1998 when it was set at 1,000:<\/p>\n

\"China-Containerized-Freight-Index-2016-03-25\"<\/p>\n

Shippers and their customers are rejoicing for the moment. But the collapse in shipping rates \u2013 to \u201czero\u201d in some cases, as Drewry reported \u2013 is taking its toll on the industry.<\/p>\n

The risk of carrier bankruptcies \u2013 with the awkward side effect of stranded cargo \u2013 increases, according to Drewry, \u201cthe longer rates remain non-remunerative, while carriers will likely intensify practices such as void sailings in order to minimize the chance of that eventuality.\u201d<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

First Ocean Freight Rates Collapse to \u201cZero,\u201d China Freight Index Plunges to Record Low, Bailouts Loom The next stage of \u201cMoral Hazard?\u201d The amount it costs to ship containers from China\u00a0to ports around the world has plunged to historic lows. As container carriers are sinking deeper into trouble, whipped by\u00a0lackluster global demand and rampant oversupply […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[2015,13174,6768,13173,4857,805,4254,4255],"class_list":["post-19276","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bailout","tag-china-freight-index","tag-moral-hazard","tag-ocean-freight-rate","tag-shipping-rates","tag-trade","tag-wolf-richter","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/19276","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=19276"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/19276\/revisions"}],"predecessor-version":[{"id":19277,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/19276\/revisions\/19277"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=19276"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=19276"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=19276"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}