Ship owners face losses as freight rates keeps dipping

Dipping freight rates, after more than two years of skyrocketing costs in a pandemic-disrupted supply chain, apparently sunk beyond the comfort threshold where shipping operators are now counting losses.

As sea freight transport continues to decline globally due to the Russia-Ukraine war shocks, freight charges continue to decrease. In the second half of 2022, cargo transportation in containers, bulk carriers and lighter ships has dwindled by 20% to 50%, say industry insiders.

With reduced cargo volume, many ships are transporting less than their carrying capacity while some ships are forced to stay anchored with no shipment deals. As a result, the owners find themselves counting losses in operating their vessels.

Falling freight rates have also dealt a blow to the recently launched direct shipping services from Chattogram to destinations in Europe. Of the four routes, shipping on the Chattogram-UK-Netherlands route, which began in May, 2022, could only continue until October that year.

Shipping insiders said they are trying to stay in business by lowering freight rates amid declining cargo volumes.

Freight charges on Europe-America routes through transhipment ports have dropped dramatically – rate per container on the Chattogram-Europe routes has come down to $1,500-2,000 from $14,000-16,000 in 2020. On the US routes the charge dropped from $16,000 to $3,000.

Despite the freight rates cooling down to the pre-pandemic levels, increased operating costs, further swelled by the fuel-oil price hike kept the shipping companies from hitting profit. Meghna Group, which operates 19 bulk carriers (12 in Asia, 7 in North America) on international sea routes, is now charging a reduced daily fare of $4,000-5,000 per ship with a carrying capacity of 50,000-60,000 tonnes from $20,000 two years ago in the Asia Region.

Likewise, daily fare per ship on South American waters dipped from $35,000-$45,000 to $20,000-$30,000.

Lighter ship operation dips as well

Lower cargo volume in turn led to lighter ship operation to decrease by 50 to 70% over the second half of the last year. The average number of mother vessels which used to unload goods daily at the outer anchorage of the Chattogram port has decreased from 80-100 to 20-25 in recent days.

Some 5,000 lighter vessels operate across the country and 12 sailors on average work in each ship. Half of these vessels transport goods from the Chattogram port to 34 sea routes of the country.

Source: The Business Standard 

To read the original reporting, please visit: https://www.tbsnews.net/economy/shippers-face-losses-freight-rates-keeps-dipping-567546

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