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If you ever want to tell the story of Sisyphus – the ancient Greek king sentenced by Zeus to perpetually haul a very heavy bolder up a hill only to see it roll away to the bottom, as punishment for his avarice and craftiness – through the prism of the modern world, there are few more appropriate places to start than in the world of container shipping.

Last week the Shanghai Container Freight Index’s China to North Europe leg declined by 12.5%, falling from a paltry $875 per teu to a risible $765 per teu, barely enough to cover bunker costs. The World Container Index from Drewry plumbed similar depths, dropping by $400 last week to finish at $1,700 per 40ft.

In response, carriers have begun to announce a set of drastic general rate increases, due to be implemented on 1 November: OOCL has announced a $975 per teu increase; Hyundai and Zim have both gone for $950 per teu; and Maersk, which announced a $600 GRI in mid-September, appears to have upped it to $700 per teu.

In part, the dramatic drop in rates last week is the result of China’s Golden Week holiday, which begins tomorrow for three days, but the fundamental reality is that demand levels remain low while “there is inherently too much capacity”, Drewry’s Neil Dekker told The Loadstar.

“To be fair, carriers have managed capacity pretty well , given the number of newbuilds that are coming in. Capacity this year has only gone up by 2%, but there’s no volume growth in the market,” Mr Dekker said.

This has left carriers with two tools to stop prices plummeting – GRIs and skipped sailings – both of which are particularly short-term tactics, and have made all the talk of developing long-term partnerships seem rather hollow, given that the last GRI of this size was only a few months ago.

One forwarder described the recent period as a “double dip”.

“It has killed off the shipping lines credibility as they had been saying: ‘stick with your contracts and you will see the benefit in peak season’. Rates are back to around $750 per teu.

“And what peak season that was,” he added sarcastically.

It is also a highly sensitive time for carriers, as negotiations for 2014’s annual contracts are due to get under way, and rate levels will be guided by spot market levels. Mr Dekker said that the average annual contract rate was around $1,800 per 40ft and lines would want to push that above $2,000 next year.

“Clearly the strategy of the GRIs is to get rate levels up in November. So even if a quarter of this planned increase sticks it will be better than nothing – the problem is that we know from July that if they do stick, it doesn’t last for long,” he added.

And the prognosis for forwarders and shippers weary of this constant seesaw is pretty bleak – Sisyphean indeed.

“The supply pressure in terms of newbuildings is going to continue for the rest of this year and the next and 2015 – there is very little opportunity for the industry to seriously cut capacity, so how on earth is it going to survive for the next three years?” Mr Dekker said.

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