NEW YORK - April 9, 2009 - Global shipping rates are set to fall by 74 per cent this year as commodity demand continues to fall in Asia and the massive glut of vessels ordered during the boom years finally takes to the seas.

The expected collapse in rates, which could push dozens of shipowners close to bankruptcy, comes after a 92 per cent decline in the Baltic Dry Index (BDI) of shipping rates over the course of last year. The misery is expected to continue well into 2010, with a further 15 per cent drop in rates before any rebound brings relief to fleet-owners.

The closely watched gauge of world trade in iron ore, coal and other bulk cargoes has fallen for 19 consecutive days, the same rate of decline that occurred after the collapse of Lehman Brothers, the investment bank, and the catastrophic freezing of trade finance.

The stark warning of a continuing collapse in the BDI, issued by analysts at Nomura Securities in Hong Kong, comes after industry predictions of multiple order cancellations by shipowners and forecasts that record numbers of vessels may be put into storage. According to the gloomiest forecasts, fleet-owners may lay-up the greatest number of ships since the oil crisis of the 1970s.

Yet these measures, however drastic, may not be enough to fight further alarming declines in freight rates. Even if 40 per cent of worldwide order books were cancelled this year, analysts say, the slump in global demand and the sharp rise in Chinese inventories of iron ore and coal suggest that the worst is yet to come.