A weak trend of improvement in the Stifel Logistics Confidence Index is evident, though the Index is still short of the neutral 50 point mark, report analysts for the London-based think tank, Transport Intelligence (Ti).
“With a fourth consecutive month on month increase registered in September, the Index for sea freight has shown that confidence appears to be creeping back into the industry, despite the well-cited capacity crisis,” say analysts. “Unfortunately for Hanjin Shipping, this has not translated into enough container volumes for the carrier to survive; it filed for bankruptcy on August 31st.”
Ironically, analysts note, time may prove this event to be the turning point for the container shipping business. With a round of M&A activity initiated by several major carriers late last year, competition in this commoditized market has increasingly descended into a scrap over who can best sustain losses.
Should the South Korean Government elect not to intervene on behalf of Hanjin Shipping, the company’s death may well serve as a stay of execution for other carriers under financial pressure.
According to the Ti analysts, Hanjin Shipping accounted for 7.85% of trans-Pacific containers inbound to the US during the first half of 2015. Moreover, the shipping line accounted for around 9% of Asia-Mediterranean trade during the same period. Accordingly, the Shanghai Shipping Exchange measured a 51% increase in the spot rate for shipping a 40-foot container (FEU) from Asia to the US West Coast last week, to $1,746 per FEU.