With fears of a US recession and a flood of new container slots dampening sentiment, Drewry Shipping Consultants is revising growth prospects downwards and predicting softer freight rates, especially on the east-west trades to and from Asia.

Drewry expects world container trade to grow by 8.4 per cent this year to from 68.7 million TEUs to 74.5 million TEUs after climbing 10.3 per cent last year.

Drewry warns that a 12.5 per cent increase in global cellular capacity this year, followed by a further 13.8 per cent in 2002 is likely to cut carrier's revenue margins.

The consultants predict the liner shipping industry to face a further round of cost-cutting, consolidation and rationalisation. 

This slowdown coincides with a projected expansion in fleet capacity of 12.5 per cent this year and 13.8 per cent in 2002.

This has caused a sharp deterioration of Drewry’s unique supply/demand balance index which is projected to fall from 94.6 in 2000 to 93.7 in 2001 and 92.2 in 2002.

Meanwhile, freight rates in the Europe-Asia trade are said to be flattening out with carriers were unable to obtain the hoped-for westbound rate increases that should have taken effect on April 1. 

The Far Eastern Freight Conference announced a US$150 per TEU rate increase from the beginning of this month, with a second rate hike of $250 per TEU scheduled for August 1. 

However, member lines say rate levels have remained broadly unchanged, despite high ship utilisation levels, as shippers take advantage of the prospective capacity increases to put pressure on carriers to keep prices down.