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Ocean carriers not likely to capture more revenue, say analysts

According to Drewry’s latest quarterly Container Forecast, the global demand remains fairly positive, at just over 7 percent growth for this year and despite concern in the western economies, analysts for the London-based think tank still see decent volumes in intra-Asia and on emerging trades with Latin America.??
By Patrick Burnson, Executive Editor
October 10, 2011

An excess of capacity on key routes, as well as poor discipline from carriers means that container shipping lines will not cover their cost of capital in 2011, and many will lose money once again.

According to Drewry’s latest quarterly Container Forecast, the global demand remains fairly positive, at just over 7 percent growth for this year and despite concern in the western economies, analysts for the London-based think tank still see decent volumes in intra-Asia and on emerging trades with Latin America.??

“Our question is – if the industry is unable to make money in a relatively strong year, then what will happen if/when demand seriously falls away on a global scale?” said Drewry spokesmen. 

Analysts also noted that these are important times for carrier/shipper rate negotiations and the assumption now is clearly that the leading carriers are intent on protecting market share, rather than maintaining profitability.
This view was shared by Jared Sullivan, economist with CBRE Econometric Advisors.

“A weakening rates structure may impact the carrier’s ability to build for the future,” he told an audience convened last week at Supply Chain Council’s Executive Summit.

Maritime analysts note that a weaker than anticipated peak season has meant that headhaul Asia to Europe and particularly transpacific volumes have faltered.

“With load factors of only 80-85 percent, carriers have not successfully pushed through their peak season surcharges and the severe overcapacity in these core east-west trades has been starkly revealed,” said Drewry Forecast analyst, Neil Dekker.

About the Author

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Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


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