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Profits squeezed by overcapacity, weak demand, tough pricing
LONDON's Drewry Maritime Research says carrier profit will be hard to come by this year because of overcapacity, weak demand and aggressive pricing.
"There are not enough good routes for box ships over 8,000 TEU where they can be placed without doing some damage to the supply-demand balance," said Drewry research chief Neil Dekker.
"The orderbook is starting to get out of control with another 1.14 million TEU added since January," he said. "Carriers cannot keep adding capacity and expect there will be no impact on revenue."
Drewry says carriers will be lucky to break even this year, a reversal of its early 2015 forecast when it predicted carriers would generate profits of up to US$8 billion.
Oil price savings were passed onto shippers by the lines through lower freight rates.
This year, rates are expected fall their fastest pace since 2011, when unit revenue dropped as much as 10 per cent.
"There are not enough good routes for box ships over 8,000 TEU where they can be placed without doing some damage to the supply-demand balance," said Drewry research chief Neil Dekker.
"The orderbook is starting to get out of control with another 1.14 million TEU added since January," he said. "Carriers cannot keep adding capacity and expect there will be no impact on revenue."
Drewry says carriers will be lucky to break even this year, a reversal of its early 2015 forecast when it predicted carriers would generate profits of up to US$8 billion.
Oil price savings were passed onto shippers by the lines through lower freight rates.
This year, rates are expected fall their fastest pace since 2011, when unit revenue dropped as much as 10 per cent.
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