Freight rates to fall, says Deutsche Bank

Nov 14 | Updated: Nov 15 2005, 06:25am hrs
Shipping rates for oil, bulk commodities and containers carrying manufactured goods may fall by as much as 7.5% annually in the next two years as the global fleet of vessels expand, according to Deutsche Bank AG.

AP Moeller-Maersk A/S, the worlds largest shipping company, boosted orders for tankers, dry-bulk carriers and containerships at yards worldwide following a two-year boom in freight rates, led by rising demand from the US and China.

London-based shipbroker Clarkson Plc estimates the orders placed for new ships at a record $77 billion.

Supply trends are set to become more hostile across all areas of the shipping complex into 2006, Hong Kong-based analyst Sam Lee said in a Nov 11 report.

Earnings from 2 million-barrel oil tankers, known as very large crude carriers, or VLCCs, may fall 7% annually in the next two years to an average $25,000 a day, Mr Lee said. As measured in the tanker markets worldscale point standard, thats about WS 60, he said.