Depending on how you look at it, ocean container shipping has seen a major change since the summer of 2016. The new shipping alliances have started to mobilize in 2017 and the volatility of rates for all the major trade lanes is nothing short of unnoticeable. Blank sailings, GRIs, drop in rates. Will it be a buyer’s or seller’s market? What is on the horizon? Let’s not call the doom for carriers and complete plummet of the market too soon. It’s still early.
The box carrier world is far different post-Hanjin. We’ve got the 2M Alliance (plus HMM), THE Alliance, and the Ocean Alliance. Cosco and CSCL have merged, Zim has shrunk to regional carrier status, while the three Japanese lines are merging into the Ocean Network Express (ONE). And while MSC and CMA CGM, the world’s second and third largest box lines, are reportedly building ships with a capacity of 23,500 TEU’s, last month UNCTAD issued a warning that the box lines needed to be wary of collusion and price-gouging.
OOCL was the industry rockstar: On its Asia-Europe lanes the improvement was huge. 3rdQ TEU liftings were up 25%, with revenue up 26.1%. YTD revenue was up 19%. On its main trans-Pacific lane, liftings were up 14% on the same quarter a year ago to 474,794 TEU with YTD up 20% to 1.4m TEU.
Maersk: Reported a 3rd Q net profit of $220m in the third quarter, compared with a loss of $122m in 3rdQ 2016. Maersk 3PL Damco’s ocean traffic volume declined 3%, and they lost considerable money due to this summer’s cyber attack. APM Terminals volume increased 6.5% YTD, but had to write off US $374m as several of their terminals were re-valued.
Yang Ming Line turned a profit for the first time in 2 ½ years (ten quarters) as they reported a 3rdQ profit of U.S. $ 42 million. The combination of rising TEU volumes, higher container rates, and cost-reduction programs are starting to show results – but what will happen if rates continue to sink?
The Japanese lines each showed a profit; with future Ocean Network Express (ONE) members NYK, MOL, and K Line each showing strength in different regional markets (US-Asia, Asia-Europe, and Transpacific), which could be a harbinger of good news when their merger closes in April 2018.
All the alliances have announced blanking programs on their Asia-Europe routes, yet those rates continue to fall.
TEU capacity is still a worrying issue; Maersk recently noted they have some 800,000 TEU’s capacity on short-term charter than can be cancelled within the year as their new megas join the fleet, but those ship-owners will surely try to lease them to another carrier?
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