The Shanghai International Shipping Institute's (SISI) index showing China sector's level of prosperity in the third quarter fell from the 100-point neutral reading to 78 after a 16-point decline in the second quarter, Xinhua reports.
Container shipping rate increased in the second quarter led by Maersk improving carrier profits. But as more large ships came into service, the supply-demand imbalance was worsened. Utilisation fell to 70 per cent, forcing carriers to cut prices again, nullifying September gains, and prompting speculation about a coming rate war.
Some indicators such as port throughput have continued lingering below prosperity level for 10 months compared to a duration of eight months in financial crisis. The survey shows that 63 per cent of companies polled are pessimistic.
The dry bulk sector was the most depressed market. Despite a rise of the Baltic Dry Index (BDI), rates have been lower than cost for a long period, and there are expectations that small and medium carriers will go bankrupt. It is estimated it will take at least two years for dry bulk to recover, said the report.
Though China's infrastructure investment scheme and the US Federal Reserve's stimulus funding are expected to boost bulk commodity trade, more than 60 per cent of the dry bulk carriers still think negatively in terms of recovery.
Pessimism reigns because of shrinking demand for ore caused by China's control of steel production capacity, and the falling price of domestic coal also reduces demand.
Port prosperity index in the third quarter was 97.42 points, falling for the first time falling below the 100-point prosperity level with some port operators' profits dropping more than 40 per cent.
SISI predicts that the business environment in the fourth quarter will remain the same recovery is unlikely to occur. Dry bulk carriers will face a more difficult situation than other sectors.
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