Ocean-freight rates fall as global demand slows for some commodities - report
06.12.2005, 11:44 PM
HONG KONG (AFX) - Ocean-freight rates have fallen nearly 25 pct in the past six weeks, reflecting a global slowdown in the movement of iron ore, grain, coal and other commodities, Asian Wall Street Journal reported.
While the slowdown is hardly welcome, the upshot is lower transportation costs for a multitude of industries, such as appliance makers, chemical producers and even bakeries, which use such materials in production processes, it said.
Surging demand and a shortage of ships pushed freight rates to record highs in December. But since then, the Baltic Dry Index, the main industry indicator for commodity-freight rates, has fallen by more than half, with the slide accelerating in recent weeks, the Journal noted.
While industry officials point to a recent cutback in China's imports, particularly of iron ore used in steel production, as the driving force behind the precipitous decline, the downturn has broader roots, the paper noted.
'The reason these prices are coming down is because world growth is slowing and US growth is slowing,' the paper quoted Nariman Behravesh, chief economist at Global Insight, an economic forecasting and consulting firm in Lexington, Massachusetts, as saying.
Industry analysts expect shipping rates to recover later this year, but not to the lofty levels seen in 2004, the Journal added.
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