Drewry’s: Container Freight Rates Headed Higher

(MarineLink)
Tuesday, July 03, 2012

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.
We are forecasting 4.3% global container growth this year and capacity management throughout the second half of 2012 is crucial if carriers are not to undo all of their efforts to force rates back up to profitable levels. The main reason for the recent spot rate successes has been the universal determination of all lines and rates have more than tripled on the Asia-Europe trade since March.
Depending on the overall development of costs, and particularly fuel, we forecast that after total carrier losses of over $6 billion in 2011 and an appalling first quarter this year, carriers could make as much as $1.8 billion profit or a loss of $1.3 billion – which should provide a decent platform for 2013 when demand will improve slightly.
It is a little too early to determine if carrier strategy has truly changed towards profits, but the signs are that they remain determined to keep rates at as high levels as possible. Yield management and the movement of rates to more acceptable levels are key aims for all carriers and if spot rates hold for the rest of the year, carriers will be in a strong position for the re-negotiation of shipper contracts in 2013.
Shippers will pay more for their transportation in 2013, although anecdotally we hear positive feedback about the influence that the Daily Maersk service is having in the Asia-Europe trade on shippers’ supply chains.
“Responsible commercial pricing will eventually help to iron out the huge volatility we have seen since 2008, creating a more stable service platform as carriers will be less likely to pull services quickly when they become unprofitable. The rhetoric coming from the new boss of Maersk in Copenhagen is that the company is concentrating on profit now – this does bode very well for the industry,” Neil Dekker, head of Drewry container research explained.
The industry has started to find a new equilibrium and it needs to settle down and continue to create an environment of stability. Since we do not see significant demand growth in the headhaul east-west trades next year, the industry must refrain from ordering new ships in the next 18 months to enable a return to a more normal supply-demand balance in the medium term.

About the Report

“Container Forecaster 2Q12” is published by Drewry Maritime Research.
Released in June 2012 and is priced at £2775 for a yearly subscription, based on 4 quarterly issues.
The report will be available in pdf format which can be downloaded from the Drewry website www.drewry.co.uk

 

Maritime Reporter June 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Finance

Indonesia Expects Total to Decide on Mahakam within days

French oil firm Total  will decide how much interest it will retain from 2018 in Indonesia's offshore Mahakam oil and gas block over the next two days, the

Asia-N Europe Container Freight Rates Jumps 60%

Shipping freight rates for transporting containers from ports in Asia to Northern Europe rose by 60.4 percent to $879 per 20-foot container (TEU) in the week ended on Friday,

Stena RoRo Charters Three Vessels

Stena RoRo has reached an agreement with the Finnish shipping company Godby Shipping to long-term charter their three RoRo vessels Misida, Misana and Miranda.

Container Ships

Asia-N Europe Container Freight Rates Jumps 60%

Shipping freight rates for transporting containers from ports in Asia to Northern Europe rose by 60.4 percent to $879 per 20-foot container (TEU) in the week ended on Friday,

G6 Alliance Extends Asia – North America Service

In response to market demand, members of the G6 Alliance today announced the below enhancement to improve the Asia – North America (East Coast) trade. NYK will

Record Bulk Shipping Demolition Rates in 1H15

Monthly demolition rates in the dry bulk shipping sector averaged 3.3 million DWT for 1H15, according to new figures from BIMCO, compared to 1.3 million DWT last year.

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Standards Naval Architecture Offshore Oil Port Authority Salvage Ship Electronics Ship Repair Shipbuilding / Vessel Construction
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1202 sec (8 req/sec)