The cost of shipping goods from Asia to Europe looks set to plummet further in 2009 as export demand for goods produced in the region continues to fall.
It is reported that the cost of shipping goods from Asia to Europe looks set to plummet further in 2009 as export demand for goods produced in the region continues to fall. A source at a major Indonesian shipping concern told Procurement Leaders said that "In 2008, average rates from South East Asia to Europe for a 20ft container were around USD 1,500 plus surcharges. Today, its approximately USD 500." According to recent data, export rates have declined hugely throughout Asia, with YoY figures suggesting that exports from Korea will be 30% down in January 2009 a similar figure to the 27% recorded in Japan but dwarfed by the 42% drop in exports from Taiwan.
According to statement earlier this month, container volumes from Asia to the US fell by around 7% throughout 2008 a massive drop on the 15 year growth average of around 8%. This, in part, has been down to the strengthening of the US dollar, but it has also coincided with the biggest drop in consumer demand since the 1930's. The cost impact for those procurement operations in both the US and Europe leaning heavily on Asia has been huge.
The Baltic Dry Index, which measures freight rates for bulk commodities, fell a staggering 96% in the final quarter of 2008, a further indication of the tumultuous conditions in the container shipping industry.