By Mike Wackett

(The Loadstar) – If losses proceed and ocean carriers persist in focusing solely on decreasing prices somewhat than bettering income per teu, the container liner business “could get very ugly” within the second half of the yr, mentioned Drewry right this moment.

Most carriers operated within the crimson within the last quarter of 2015, regardless of attaining passable vessel load components, as common freight charges per container declined dramatically.

And since then, spot container charges have fallen additional and contract charges suffered the identical destiny, placing container line earnings underneath extreme stress.

In the most recent Container Forecaster, revealed by Drewry Maritime Research, Neil Dekker, director of container analysis, mentioned: “Ocean carriers needs to be income per teu somewhat than business load components.

“In a world where overcapacity is a given on every trade, headhaul load factors of, for example, 85% need not be considered a disaster by any means.”

Moreover, with 2.6m teu of newbuild capability attributable to hit the water by the top of 2017, this type of load issue, and even decrease, is the brand new actuality, instructed Mr Dekker, advising carriers to “get used to it”.

He added that having targeted on prices for thus lengthy, it was now “vital that carriers turn themselves to the revenue side of the equation”, provided that they’re not in a position to scale back prices on the identical tempo as declining world freight charges – not least as a result of the benefits of decrease gas costs have already been cashed in.

According to Drewry knowledge, prior to now yr alone, the typical measurement of vessels deployed between Asia and North Europe has jumped from 12,000 teu to 14,000 teu, indicating that ocean carriers proceed to imagine that decreasing slot prices is all that’s wanted to make sure profitability.

However, Drewry mentioned carriers had been clinging to a “vain belief” that the decrease slot prices of 14,000 teu and 18,000 teu ships would assure them success. Its current analysis exhibits that economies of scale “are much reduced after vessels of this size are deployed”.

And shipowners being requested to bail out Hyundai Merchant Marine (HMM), by drastically chopping every day rent charges on long-term chartered ships, is a “sign of the times”, added Drewry, of an business pushed by price discount insurance policies.

However, there may be rising proof that ocean carriers are already heeding Drewry’s recommendation. Both Maersk Line and Hapag-Lloyd just lately introduced plans to pay attention extra on higher-paying area of interest container enterprise, with the latter particularly constructing“improvement of revenue quality” into its strategic company plan.

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