From today’s Wall Street Journal:
The world’s biggest container-shipping operators are making an expensive bet by committing billions of dollars in giant vessel orders. So far, that bet is a losing one as freight rates hover around record lows and demand for ocean shipping is weak.
The already big operators are looking to grow and expect their smaller rivals, that can’t afford such vessels, eventually to abandon the most lucrative ocean routes, leaving freight rates to move upward as cargo owners find fewer choices to ship their products. For now, at least, it is turning into a very costly plan.
The glut of massive ships is adding to the overcapacity on the world’s busiest trade lanes, particularly the benchmark Asia-to-Europe route, pushing the cost of shipping a container from Shanghai to Rotterdam down to a record low of $342 per 20-foot container last week. The year-to-date average is $742 a container, down 36% from the $1,151 average for the first five months of 2014.