News Content

Improved efficiency, reduced costs to boost carriers profits

CONTAINER shipping lines are expected to boost earnings in 2015 as ship costs fall and efforts to improve operational efficiency pay off.

This, despite record numbers of vessel deliveries scheduled this year, according to London-based shipping consultancy Drewry.

"Carriers are winning the battle between rates and costs," said Drewry container research director Neil Dekker, according to American Shipper.

"However, there are issues such as port congestion which are both costly and outside the direct control of carriers."

Drewry's latest edition of its Container Forecaster estimates the global container fleet will grow 7.2 per cent this year, faster than the projected 5.3-per cent growth in demand.

Industry analysts say unit costs will continue to decrease at a faster pace than freight rates, resulting in increased profitability. In the fourth quarter bunker costs declined 50 per cent compared to the same period in 2013.

According to the report, the industry will finish 2014 in the black, thanks mainly to the contributions of a handful of lines such as Maersk and CMA CGM, while others will have lost money.

"More carriers are expected to be profitable in 2015, provided that a number of tailwinds prevail," Drewry said.

"These include continuing carrier focus on vessel deployment, fuel costs remaining low, recovering demand, successful outcome of annual BCO [Beneficial Cargo Owner] contract negotiations, and new operational alliances delivering greater market stability."

The report added: "Network planning, slow steaming and the introduction of the mega alliances will all help the drive towards a more profitable industry."