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 ·

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

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 [email protected]

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Latest Whitepaper
How Lean is your Lean Quality Program?
Avoid quality program bureaucracy that can sap logistics productivity and increase costs
Download Today!
From the September 2016 Issue
Indecision revolving around three complex supply chain elements—transportation, technology and organizational structure—finds many companies waiting to commit to a strategic path. However, waiting too long will only result in a competitive disadvantage that will be difficult to overcome in today’s fast-paced, global economy.
Time for Asia’s ports to rebuild
Is the freight recession upon us…again?
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Supply Chain Best Practices: Visibility to In-Transit Inventory
During this webcast you'll learn on how various organizations have gained instant access to in-transit parcels and given access to this information to stakeholders.
Register Today!
EDITORS' PICKS
25th Annual Masters of Logistics
Indecision revolving around three complex supply chain elements—transportation, technology and...
2016 Quest for Quality: Winners Take the Spotlight
Which carriers, third-party logistics providers and U.S. ports have crossed the service-excellence...

Regional ports concentrate on growth and connectivity
With the Panama Canal expansion complete, ocean cargo gateways in the Caribbean are investing to...
Digital Reality Check
Just how close are we to the ideal digital supply network? Not as close as we might like to think....