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Some cause for liner optimism, says Drewry

Some cause for liner optimism, says Drewry
London: Container lines have the potential to return to profit during 2013, provided they 'refrain from old habits and stick to pricing and capacity discipline', Drewry’s Container Forecaster predicts.

The firm forecasts a rise in average freight rates and volumes for the year by around 3% and 4% respectively, and a drop in bunker costs by 1.5% - the first year-on-year decrease since 2009.

The report estimates total 2012 profit for the boxship sector at $280m, which it describes as "very poor return" for moving nearly 170m teu. The year ended on a disappointing note, with average operating margins shrinking from Q3’s healthy 6.6% to 0.1% in Q4, "and only three major carriers (CMA CGM, Maersk Line and OOCL) returned a meaningful profit", it says. However, the result represents a "significant improvement" on the estimated $7.7bn loss in 2011.

“We do expect carriers to make money again this year, but it should be reiterated that carriers themselves are the biggest risk to this forecast”, the report concludes. “While there are significant profit gains to be had through cost-cutting, if lines were to lose their pricing discipline and enter into a new rate war heavy losses will undoubtedly follow." The industry cumulatively lost $700m between 2008-12, the report notes gloomily.

TAGS: Containers