Rate fall: is it seasonal or is there a bigger problem brewing?

FREIGHT rates on the major east-west trades continue to slide in the fourth quarter, leaving some analysts to ponder whether this is the usual slackening off for the end of year or is there something more to the recent decline?

One of the key concerns some industry watchers are keeping an eye on is the growing overcapacity creeping into the market.

RS Platou analysts reported that Asia-Europe freight rates have fallen 10 per cent from the third quarter thus far, and have projected that by the end of the year this dip will increase to 15 per cent.

In its Shipping Weekly report, RS Platou said it believes we will see a pickup in rate late in the first quarter of 2011, however, if carriers are not disciplined in the current slack season then we could be looking at a severe negative impact on carrier profitability…