SHIPPING transport prices are expected to slide by another 10 per cent this year as the global market struggles to cope with shipping capacity that has been boosted to meet import demands from China.

Analysts at Fitch Ratings gave warning that the party is over for much of the industry, with the cost of hiring freight-carrying ships having dropped about two thirds in the past year. Fitch claims that global freight rates could slide a further 10 per cent this year as the industry grapples with more shipping capacity than demand.

Faced with the onslaught of demand from China, shipowners had increased their orders for ships, which are now being delivered. Fitch analysts said that the global fleet could expand 14 per cent over this year and next.

China’s hunger for raw materials had inflated prices for shipping to record levels in recent years. At the end of 2004 its demand for iron ore to fuel its construction boom pushed prices up to $105,500 (£60,000) a day. The highest price paid was $120,000 a day for a ship from Brazil to China.

James Leake, a senior analyst at JE Hyde, the shipping brokerage, said: “It was a question of raw materials being imported at any cost.”

However, as demand from China remains robust, many in the shipping industry attribute the slide in prices to reduced congestion at ports in China and the key iron ore ports in Brazil and Australia.

China’s voracious appetite for commodities has consumed much of the world’s ships, but problems with infrastructure have created week-long queues of ships waiting to offload their goods at Chinese ports.

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