Ocean carriers succeeded in raising freight rates on the headhaul legs of the Asia-Europe and trans-Pacific trades in the last month, but their results are likely to be weak in the first quarter before improving as the year progresses, Drewry Maritime Research said in its latest Container Forecaster.
The general rate increases implemented in March lifted spot rates above or at least close to break even, but even the largest container ships operating on the Asia-North Europe trade weren’t making money until very recently.
Drewry raised its estimate of carrier losses last year to $6.5 billion from its previous estimate of $5.2 billion.
As a result, it will take some time for the industry to make up lost ground, because carriers couldn’t sustain 2010’s surprisingly strong recovery last year, when global demand increased 7.4 percent.
In the wake of the last month's rate increases, Drewry forecasts east-west freight rates, including fuel surcharges, will increase as much 13.7 percent this year.
“But we should not be lulled into a false sense of security by the considerably higher spot rates revealed in the weekly rate indices and think that all is now fixed,” the quarterly Container Forecaster warned. “Demand is by no means certain and we have downgraded our 2012 global forecast to 4.6 percent, largely on the basis of a weak Eurozone, crippled by debt.”
The possibility of turning a profit this year will hinge on the liner companies’ “determination to maintain their rate increases and little else since they resolutely refuse to put significant tonnage into lay-up,” the report said. Another 59 ships of at least 10,000 20-foot equivalent units will enter the global fleet this year, it noted.
“This is only stage-one in the recovery process, and how 2012 pans out will be very much dependent on carriers’ commercial behavior and their strategy for laying up ships as well as the relative health of the industry fundamentals,” said Neil Dekker, head of Drewry’s container research.