Surging fuel prices eat into ocean liners' profits, while spot rates drop

SOARING fuel costs are hitting container shipping lines hard at a time
when spot rates from Asia to Europe and from Asia to the US west coast
are 30 per cent lower than 12 months ago, yet fuel costs have jumped
by one-fifth.

Most carriers claim it is "too early to say" at what level rates will
settle but concerns are mounting within ocean liners' management teams
that the cumulative US$7 billion industry profit in 2017 could have
been a one-off, reported UK's The Loadstar.

Speaking during Hapag Lloyd's 2017 results presentation, chief
executive Rolf Habben-Jansen said new contracts on the route had been
agreed at a level "on average somewhat better than a year ago,"
although it was not clear whether this took into account the higher
cost of bunker fuel.

However, spot business makes up half of the total liftings on the
trade and carriers cannot support any further rate declines.

On the other hand, there was better news for transpacific carriers,
with the SCFI reacting positively to April 1 general rate increases,
rising 19.3 per cent to the US west coast to $1,127 per 40 foot
container (FEU), and gaining 11.1 per cent to US east coast ports to
$2,148 per FEU.

The positive shift in the US trades last week was good news for
carriers trying to negotiate improved contract rates from May 1,
however, spot rates are still 31 per cent below 2017 levels for the
west coast and 19 per cent lower for the US east coast.