Falling freight rate puts Asian shipping into problems

Falling freight rate puts Asian shipping in disarray

A falling freight rate due to an ongoing slowdown in Europe has put shipping trade in disarray across Asia including Bangladesh, which has a tiny fleet of private and state-owned merchant vessels engaged in international trade, industry sources said on Friday.

The freight rate has been falling over the past several years when costs for bunkering, port dues, wages for crew etc have been rising up putting the shipping industry in dire straits.

“A slowdown in Europe has reduced imports to the continent drastically, putting the shipping companies in Asia in disarray,” Syed Amirul Haque, managing director of the Chittagong-based Seacom Shipping Lines Limited, told the FE.

“There is no chance of improvement unless Europe rebounds,” Mr Haque, a former director of Bangladesh Chamber of Commerce and Industry, said.

The Baltic Dry Index (BDI), that scales freight rates, was 744 on Friday against 1100 on average in 2008. BDI is issued daily by the London-based Baltic Exchange, that makes “assessment of the price of moving the major raw materials by sea”.

With the fall in freight charge, rising costs of other expenses including port dues, expenses of shipping agents, crew wages etc, are also compelling the ship owners to switch over to other business abandoning ships, industry sources said.

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