Shipping firms in China struggle to keep their heads above water
Time：2014-07-23
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Shipping costs for short sea shipping have continued to decline and prices hit another record low in the market recently. Shanghai’s China Business News reported that most shipping firms in China were unprofitable during the first half of this year.
The downturn is attributed to a slowing economy, seasonal factors and changes in supply and demand in terms of shipping volume.
According to data from the Shanghai Shipping Exchange, China’s coastal bulk (coal) freight index was at 533 points on June 30 this year, a plunge of 52% from the 1,100 points a year ago.
“The freight industry will not hit a bottom, but just keep falling further, which has become the norm in the market. There has been a record price drop for the Qinhuangdao-Shanghai route to 20.9 yuan (US$3.40) per tonne and prices for the Qinhuangdao-Guangzhou route have fallen to 30.3 yuan (US$4.88) per tonne,” said Mr Wang, who works at a bulk shipping company.
Wang added that many ships are choosing to suspend services because the freight volume is lower than operation costs.
The short sea shipping market is likely to rebound soon, however, as the government is encouraging the scrapping of old boats. Demand for coal is also expected to rise as power consumption during the summer increases, which may boost demand for shipping, as well as bulk freight.
The international bulk transport market is also experiencing a downtrend, as the market has been sluggish since the beginning of this year after favorable catalysts diminished during the last quarter of 2013.
As of June 30, the Baltic Dry Index was pegged at 850 points, down by 60% from the 2,113 points seen at the beginning of this year.