Many container ship operators will report losses in the first half of 2012 before bouncing back later in the year, according to a shipping analyst.
Janet Lewis, head of Asia shipping research for Macquarie Capital Securities, said the peak summer shipping season and rising cargo rates will most likely improve returns for lines in the third quarter.
“We believe most carriers are likely to see significantly better profitability in the second half of the year, even with some softening of rates into the fourth quarter, than in the first half,” she said.
Lewis said contracts with many BCOs on Asia-Europe were set in January, and some carriers had locked in money-losing rates and would not yet be benefiting from the recent improvement in spot rates, but would be able to renegotiate at higher levels as the year progressed.
New service contracts on the trans-Pacific trades would also only take effect in May and June, and their impact would not be properly felt until the third quarter.
OOCL’s parent company OOIL was the only global carrier that was “solidly profitable” in 2011. Lewis said the weight of quarter one losses would push many operators into loss for the first half year as gains in quarter two would not be sufficient to offset the losses from the first quarter.
With credit rating agencies holding a negative outlook for most carriers, there was significant pressure on lines to not repeat another year of losses.
“Hope lies in carrier behaviour, with a significant volume of new capacity coming on, especially for ultra large container ships, and sluggish volume growth on Asia-Europe and trans-Pacific likely to persist, carrier discipline is critical to maintaining the recent rate hikes,” she added.
“We are encouraged that the G6 Alliance has decided for now not to launch the planned seventh service on Asia- Europe. As they have the fewest ULCS, however, there is less pressure to absorb new capacity – as is the case for Maersk, the other company publicly declaring its capacity discipline,” she said.
“It remains to be seen whether the MSC/CMA CGM Alliance and CKYH + Evergreen + CSCL show similar restraint,” Lewis said.
Contact Mike King at firstname.lastname@example.org.