Drewry: Ocean carriers succeed in restoring rates to profitable levels

DREWRY, a London-based maritime consultancy, has concluded that successful implementation of significant rate restoration initiatives by container shipping lines on east-west trade lanes means that most now operate above the break-even level.

The Drewry Container Forecaster 2012 report attributed the recent spot rate successes to the universal determination of all shipping lines, with rates more than tripling on the Asia-Europe trade since March.

"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," the report said. "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."

The report also said "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".

The researchers are forecasting 4.3 per cent global container growth this year despite an "appalling" first quarter.

"Depending on the overall development of costs, and particularly fuel, we forecast that after total carrier losses of over US$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," the Drewry report said.

"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," said Neil Dekker, head of Drewry container research.