Lines seem 'indifferent' to shipper problems as new alliances settle in

© Peter Mautsch / Maranso Gmbh

Shipping lines in the new alliance structure seem “indifferent to certain problems of backhaul shippers”, according to new research.

In its quarterly Container Freight Rates & Shipping Market Outlook, Drewry suggests the full impact of the new alliance structures is still to be seen, with some in the market seeing “a kind of hierarchy with the 2M being the strongest, certainly financially”, followed by the Ocean Alliance, with THE Alliance being “perhaps the weakest grouping financially”.

Neil Dekker, director for container research, said there had been “an awful lot of services reconfigured” as a consequence of the alliance rejig, causing “short-term turmoil” and capacity restrictions on tradelanes, such as the backhaul North Europe to Asia route.

As a result Simon Heaney, senior manager container research, said he thought there were opportunities for freight forwarders to make further inroads into container shipping client portfolios by offering smart solution benefits to the temporary supply chain issues caused by the alliance reshuffles.

Nevertheless, Drewry believes 2017 has started “very well for carrier freight rates” and the container shipping market is now “well and truly off the bottom”.

In a webinar presentation today, Drewry’s senior analysts were optimistic that container lines could turn a profit this year, but cautioned that the recovery was on a “knife edge”, and could be halted by a sudden spike in bunker costs or the outbreak of a new rate war.

Drewry predicts that the liner industry will collectively move into the black this year, but by a modest operating full-year profit of between $1.5bn and $3bn.

Drewry is forecasting global demand growth of 2.8% for 2017, against a capacity growth of 2.7% – a figure that has been downgraded to factor in “strong scrapping and carriers delaying deliveries”.

Mr Dekker, said that the orderbook had been “dead for well over a year”. Indeed, he said there seemed no prospect of a recovery for the embattled shipyards, given that there is currently zero appetite from the carriers for more newbuild tonnage.

On freight rates, Mr Heaney said: “We can say with a high degree of confidence that the market has turned, and that carriers are once again price givers rather than price takers.”

Drewry maintained its forecast of an 11-12% increase in global freight rates this year, and a 14% lift in east – west rates.

However, Mr Heaney added that after the assessment of new data it was “pretty likely” that this forecast would be raised in Drewry’s June review “by at least a few percentage points”.

However, the analyst noted that the current uptick would do little to reverse the long-term decline in rates and that to do so would require a “prolonged period of above average rates”.

He added that “eventually the current bull run would come to an end” and rates would revert back to the trend. “The only question is when?”