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Neil Dekker News

01 Nov 2016

J Lines’ Merger is All About Scale and Survival

The announcement that three Japanese shipping groups will merge their liner shipping businesses is further evidence of survival M&A sweeping the industry according to global shipping consultancy Drewry. This morning Kawasaki Kisen Kaisha Ltd. (K-Line), Mitsui OSK Lines (MOL), and Nippon Yusen Kabushiki Kaisha (NYK) announced their agreement, subject to resolution by the board of directors of each company and shareholder/regulatory approval, to establish a new joint-venture company and to integrate their container shipping operations. We had envisaged this happening in an update published in June 2016, (Drewry Maritime Equity Research…

19 Oct 2016

Container Shipping Market has Bottomed Out

Hanjin’s receivership represents the trough of the container shipping market and despite continuing concerns of weak trade growth and fleet oversupply a gradual market recovery is now expected, according to the latest annual Container Forecaster and Review 2016/17 report published by global shipping consultancy Drewry. Worse than expected second quarter financial results will be followed by a better second half-year. But Drewry still expects container carriers to record a collective operating loss of $5 billion this year. We forecast industry profitability to recover next year, thanks to improving freight rates and slightly higher cargo volumes, and so record a modest operating profit of $2.5 billion in 2017. However, this anticipated recovery needs to be put into perspective.

05 Jul 2016

Drewry: Container Shipping Rates Have Bottomed Out, Forecast to Rise

(Photo: Greg Trauthwein)

Container freight rates are forecast to rise modestly over the next 18 months from the all-time lows reached recently, but this will not be sufficient to rescue the industry from substantial losses in 2016, according to the latest Container Forecaster report published by global shipping consultancy Drewry. Liner shipping has had a torrid time so far in 2016 with spot freight rate volatility reaching unprecedented levels, while unit industry income has fallen to record lows. There are distinct parallels between what is happening now and the depths of the 2008/09 global financial crisis.

05 Apr 2016

Container Shipping Market Move from Bad to Worse

A record volume of capacity entered the container markets in 2015. But where have the ships been deployed, and which carriers have taken on the most? The shipping consultants Drewry released their container shipping review for the first quarter 2016, and the outlook does not look positive. The drop in newbuild containership orders could be continued as container shipping companies seem to be running out of profitable trades to deploy their big ships, in turn leading to a decrease in the economic imperative and the financial ability to order new vessel. “Last year was full of records in the container shipping industry, but unfortunately for carriers they were mostly of the unwanted variety.

04 Apr 2016

Container Shipping Approaching Crucial Trigger Point - Drewry

Further expected container shipping liner losses throughout the first half of 2016, exacerbated by the awful prevailing spot and contract freight rates will lead to a major trigger point at some stage later this year. This will happen either through radical capacity management at the trade route level and/or a much more sensible and logical approach to commercial pricing, according to the latest Container Forecaster report published by global shipping consultancy Drewry. Global rate levels are no longer sustainable and with the lines’ GRI mechanism soon to be defunct on European trades due to new EU regulations that are about to be implemented, carriers will need to find new tools.

08 Jan 2016

Dark Days Ahead for Container Ships

Further widening of the supply-demand imbalance at the trade route level and insufficient measures to reduce ship capacity will lead to an acceleration of freight rate reductions and industry-wide losses in 2016, according to the latest Container Forecaster report published by global shipping consultancy Drewry. The decline in global container shipping freight rates is anticipated to have been as great as 9% last year and Drewry is forecasting that carrier unit revenues will decline further in 2016, albeit at a slightly slower pace. Excluding 2009, the past 12 months has seen the lowest spot rates in most major trade lanes and all at the same time. This is not solely due to fundamental supply/demand imbalances caused by weak volumes and over supply.

09 Nov 2015

Over-Capacity Crisis, Next Year Will be Worse

"The container shipping industry is in the midst of an over-capacity crisis which will worsen next year," Neil Dekker, director of container shipping research at Drewry said in a note accompanying the release of its 2015 edition of the Container Market Annual Review and Forecast 2015/16. Drewry says it has now slashed its container shipping growth forecast for 2015 to just 2.2 percent, while the 1.6 million TEU of extra capacity that has been added this year is the equivalent of a growth rate of 7.7 percent. As a result, the firm says its Global Supply/Demand Index indicating the relative balance of vessel capacity and cargo demand in the market (where 100 equals equilibrium) has fallen to a reading of 91 in 2015, its lowest level since 2009.

08 Oct 2015

Box Shipping Eyes More Overcapacity, Financial Pain

File photo

Slowing global trade and a bloated orderbook of large vessel capacity mean that container shipping is set for another three years of overcapacity and financial pain, according to the latest Container Forecaster report published by global shipping consultancy Drewry. The recent slowdown in world trade has forced Drewry to halve its forecast for container shipping growth for this year to just 2.2 percent and revise down estimates for future years. Meanwhile, an additional 1.6 million teu of new capacity is being added to the fleet this year, equating to a growth rate of 7.7 percent.

08 Jul 2015

Container Ship Industry ‘Lucky to Break Even' in 2015,

Global shipping consultancy Drewry predicts the container ship industry will be "lucky to break even this year" as shipping rates slump due to catastrophic overcapacity. A toxic mixture of overcapacity, weak demand and aggressive commercial pricing is threatening liner shipping industry profitability for the rest of 2015. Drewry’s new view of the market revises its earlier forecast that carriers would collectively generate profits of up to $8 billion in 2015. Drewry now says that its revised view is that carriers “will be lucky to break even this year,” meaning some lines will be back in the red by year-end. Despite first quarter industry operating margins of 8%, cost savings through falling oil prices were passed onto shippers by carriers in the form of much lower freight rates.

07 Jul 2015

Container Shipping Lucky to Break Even in 2015

File photo

A toxic mixture of overcapacity, weak demand and aggressive commercial pricing is threatening liner shipping industry profitability for the rest of 2015, according to the Container Forecaster report published by global shipping consultancy Drewry. Earlier this year Drewry forecast that container shipping carriers would collectively generate profits of up to $8 billion in 2015, but our revised view is that it will be lucky to break even this year. This means that some lines will be back in the red by the end of 2015.

15 Apr 2015

Box Ship Oversupply Stoking Trouble

Source: Drewry's Container Forecaster

Despite positive growth momentum, the container shipping industry continues to suffer new, big ship deliveries with no let-up to the ordering frenzy according to the Container Forecaster, published by Drewry Maritime Research. Drewry forecasts another year of excess growth in relation to demand in 2015. This will make it harder for carriers to repeat the estimated 92% load factors across the main headhaul East-West trade lanes achieved in 2014. New orders for Ultra Large Container vessels of at least 18…

14 Jan 2015

Containers Profit Up Thanks to Low Slot Cost

In spite of record vessel deliveries the container shipping profitability is expected to improve in 2015, driven by lower unit costs. The global fleet is expected to grow 7.2% in 2015, a faster pace than demand which is forecast to expand at a more modest 5.3%. But the shipping consultancy Drewry, forecasts that industry unit costs will continue to decline at a faster pace than average freight rates, so raising profitability. Bunker prices have plunged by more than 50% over the past six months, reducing the largest cost element for ship operators. The anecdotal evidence suggests that carriers intend to increase annual contract rates on all trades with their key BCO (beneficial cargo owner) clients this year.

03 Jul 2014

Cost-Cutting Container Carriers Forge Ahead: Analysis

As freight rates keep declining, cost reductions are the top priority for box carriers, according to Drewry's 2Q14 'Container Forecaster', highlighting that there is a widening gap between the positive financials of the few carriers really focused on cutting costs and the rest of the top 20 lines, as they battle with the pressure of falling freight rates. Drewry forecasts that once again, average freight rates will be lower than in the previous year. Drewry estimates that on the headhaul transpacific trade alone, carriers have given away in the region of $1.25 billion in annual revenue via the lower annual contracts they signed with Beneficial Cargo Owner clients in May.

02 Jul 2014

Container Shippers Battle Falling Rates

Photo: Greg Trauthwein

As freight rates keep declining, cost reductions are the top priority for box carriers. Drewry’s 2Q14 Container Forecaster highlights that there is a widening gap between the positive financials of the few carriers really focused on cutting costs and the rest of the top 20 lines, as they battle with the pressure of falling freight rates. Drewry forecasts that once again, average freight rates will be lower than in the previous year. Drewry estimates that on the headhaul transpacific trade alone…

02 Apr 2014

Container Industry Stuck in a Vicious Cycle

Photo: Maersk

The industry is stuck in a vicious cycle, Drewry reports – although new ships may give carriers lower slot costs, the supply/demand dynamics are out of kilter and freight rates remain very volatile. Drewry Maritime Research’s 1Q14 Container Forecaster report highlights that the industry remains in an extended down cycle. This is being accentuated and extended by the constant delivery of new ships. The global cascade is now hurting the balance of the north/south trades. Some of…

08 Oct 2013

Container Cascading is Hurting Trade Dynamics

Photo: Maersk

Ocean carriers are doing some things right to secure profitability, but cascading is now really hurting the dynamics of the North-South trades. Drewry Maritime’s latest annual Container Market Annual Review and Forecast 2013/14 highlights that while there is a good deal of excessive market behavior resulting in weak freight rates, ocean carriers are getting half of it right. With more than 25 ULCVs (ships of at least 10,000 teu) delivered so far this year, carriers have coped pretty well with deployment of tonnage in the main East-West trades.

03 Jul 2012

Drewry’s: Container Freight Rates Headed Higher

The recent successful implementation of significant rate restoration initiatives by carriers in the core east-west trade lanes means that most are now operating above break-even. Carriers took sufficient capacity out in the winter months to ensure that recently re-activated services have not caused too much damage to the supply/demand balance and load factors on the eastbound transpacific remain strong. However, with the worsening situation in Europe, we do not foresee a strong peak season this year and carriers will experience some rate erosion during the summer months. Evergreen’s decision to launch another weekly loop this month is not a positive and the Asia-Europe trade is most at risk because of the need to fill more 12,000+ teu ships every week.

11 Jan 2011

Drewry’s Forecast Warns Carriers

Drewry believes that the industry has emerged from the global recession with both carrier profitability and demand figures bearing this out, but still ask whether or not the industry has learnt anything? The fact that no major companies went to the wall still seems to have insulated the industry from the despair of 2009 and there is now the feeling that perhaps the dark days did not happen. In essence, Drewry observes that it is back to normal operating conditions. A number of carriers have come back into the newbuild market, believing it is the right time to buy again despite the fact that bank financing is now much more circumspect.

14 Mar 2011

Which way will container freight rates go? Carriers at crossroads, says Drewry

New Drewry special report examines drivers of container freight rates, provides five year forecasts of major east-west trades and offers suggestions for carriers and shippers on how to smooth pricing volatility. London, UK, 14th March 2011 – Container freight rates go up and then they go down - that’s just the way things are. This almost pathological acceptance that things cannot and will not change is a symptom of a deficiency within container shipping’s DNA that prevents it from being able to break the boom and bust.

13 Apr 2011

Does the Container Sector Need to go back to School?

Drewry’s quarterly Container Forecaster focuses on early 2011 and how the scene is being set for what looks like another boisterous year for the sector. What, if any, lessons have been learnt? London, UK, 13th April 2011 -The basic education of school-children used to revolve around the Three R’s of reading, writing and arithmetic. It seems that the container syllabus is currently following a similar mantra. The 3 R’s of Containerisation = rates, reductions, recklessness. Having last year successfully overturned the heavy losses of 2009…

11 Jul 2011

Container Forecaster: Industry Conditions "Very Challenging"

According to Container Forecaster, the container industry is in dire need of a correction on the supply side and even the realization of a decent peak season demand surge this summer will not provide enough momentum to lift severely eroded freight rates in the key east-west trades. Container operators will find it a very challenging environment this year in which to make money, but there is a major difference between this year and the recession ravaged 2009. We are forecasting an 8.1% growth in global container traffic for 2011 and so, other than rising fuel costs, responsibility for the inability to run their business models profitably can only be laid at the feet of the carriers themselves.

04 Jan 2012

Survival of the Fittest

Drewry’s latest quarterly Container Forecaster highlights that 2012 will be another challenging year for liner operators. With question marks over the strength of global demand, delivery of big ships will continue to be a problem and carriers’ future lay-up strategies will dictate if they make money or not. London, UK, 4th January 2012 – Carriers will want to forget 2011 quickly. Based on 3Q11 financials and year-end industry dynamics, we forecast that the industry could lose as much as $5.2 billion, despite a projected global container growth of 6.5%. Overcapacity, poor headhaul growth on the major east-west routes and the continued fight for market share amongst the lead players ensured that spot rates eroded by more than 50% on the key headhaul routes by the end of 2011.

03 Apr 2012

Container Business Faces Test of Resolve

London - Drewry’s latest quarterly Container Forecaster report highlights that, while carriers have successfully implemented a series of GRIs recently which will improve their battered financial position, there are still a number of threats which could derail this and that healthy industry profitability is by no means guaranteed. The perception might be that the industry has turned a corner and the extremely low freight rates seen on the Asia-North Europe trade at the end of last year are now behind us. We concur with this general view to an extent, and we forecast that east-west freight rates, including fuel, will rise by as much 13.7 percent this year.