Grim outlook for transpac box trade

Hong Kong: Citigroup container analyst Charles De Trenck (pictured) has provided an update on the ongoing transpacific rate negotiations and the outlook is not especially great for the lines.

Only about 20% contracts have been signed so far with the average contract concluded down 4% to 5% year-on-year, which given that costs are up by a smilar margin is likely to lead to a 40% to 50% profit decline for lines on the transpacific this year.

"There is a meeting in Oakland this week as part of a last ditch effort to stabilize rates -- and then there is a final meeting in Tokyo in early May," De Trenck noted in a research report.

Volumes have also been depressed on this tradelane since November. Transpacific first quarter volumes are about 3% at best and for the year could be 5-7% on average, he wrote.

Lines will be relieved then that Asia-Europe appears to have bottomed out and rates are recovering well. [17/04/07]

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