Bangkok Shipowners and Agents Association

Bangkok Shipowners and Agents Association
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Home News World Shipping News Asia-Europe carriers on track for high volumes and profit
Asia-Europe carriers on track for high volumes and profit PDF Print E-mail
Thursday, 10 August 2017 22:34

 

ASIA-EUROPE carriers expect a much improved year ahead on the back of rising container volume and European economic growth and firmer freight rates that boost profitability.

The interim results of Orient Overseas Container Line showed a major increase in volume and revenue on Asia-Europe in the first half of the year over the corresponding period in 2016. OOCL reported Asia-Europe volume up 22.2 per cent in the first half to 546,505 TEU, while revenue for the trade was up 48.5 per cent year on year to US$525 million.

OOCL reported the higher volumes as the European economy, driven by strong retail sales and domestic demand, expanded 0.6 per cent in the second quarter from the first, according to IHS Market, which has revised upward its 2017 forecast for Euro zone GDP growth 0.1 percentage point to two per cent.

The three Japanese carriers - MOL, NYK Line, and "K" Line - also reported a strong improvement in their financial results as the container shipping business environment strengthened. NYK Line and "K" Line both returned to the black in the first quarter of fiscal 2017 after suffering net losses a year earlier, while MOL saw its net profit quadruple.

SeaIntel said while the year-on-year comparisons on Asia-Europe were impressive, comparing 2017 with 2015 was a more realistic benchmark than 2016, forecasting that carriers on the trade stood to gain $1.2 to $1.7 billion in higher rate levels for full-year 2017 versus 2015, reported IHS Media.

The analyst said 2016 was a year plagued by a freight rate war that caused rates in the first six months to plunge to irrational levels.

"Instead, a comparison to 2015 is more relevant," SeaIntel said in its latest weekly newsletter. "Even though 2015 also saw the industry struggle, it was not in the throes of a devastating freight rate war, and, more interestingly, the average fuel price levels for full-year 2015 were in line with the levels we are seeing now."

But SeaIntel said there was an additional factor to consider when comparing 2017 Asia-North Europe freight rate levels with 2015. The combination of increasing freight volumes and a variety of bottleneck effects related to the phase-in of the new alliance networks resulted in a surge in freight rate levels on the backhaul from North Europe to Asia in 2017.