Morgan Stanley: Gloomy container prospects for 2016

The spot rates for container have dropped six weeks in a row and Chinese New Year's, which is traditionally a time of increased demand, did not come to the rescue. Gloomy prospects for 2016, Morgan Stanley assesses, while overcapacity seems to be sticking.

Photo: Copyright: Hyundai Merchant Marine

The Chinese New Year celebration at the beginning of this year did not help the struggling container shipowners. Traditionally demand increases during this period and the shipowners had prepared by putting more vessels on the water, according to numbers from major US investment bank Morgan Stanley in an update on the container market. The idled fleet has dropped so far from seven percent in November to six percent in 2016.

But there was no relief from the Chinese New Year, and the surge in demand, which is normally part of the Chinese holidays, never emerged. Spot rates have now dropped for six consecutive weeks. On the 19th of February 2016, it cost USD 332 to freight a container from the Far East to Europe, compared to USD 1,232 at the beginning of January, where container players once again tried to carry out a rate increase.

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