Tuesday, September 7, 2010

Freight Rates To Tumble In H2 2010 Due To Overcapacity And Slower Demand


International freight rates have increased over H1 2010 due to reduced transport capacity and increased freight demand, a trend that has been reflected in upswings in price indices such as the Baltic Dry Index and Danske Bank’s European Freight Forwarding Index. However, forecasted overcapacity and sluggish growth in freight volumes are expected to reduce rates in H2 2010.

Freight volumes rebounded in 2010, with the strongest recoveries being seen in North America and Asia Pacific. Various macroeconomic indicators have registered an upswing, confirming that economic activity has been in traction. According to the World Trade Organization, merchandise exports grew by 7% in Q2 2010 compared to Q1, primarily driven by the resumption of industrial activity and global trade, and the restocking of inventory. JPMorgan Global Manufacturing PMI has also signaled a recovery in global manufacturing by registering consecutive monthly growth since July 2009. However, the rate of expansion is expected to ease slightly due to the slower recovery seen in Europe and Japan. Read more here.