Jeffries Hong Kong Regional Transportation Research vice-president Bonnie Chan noted that the lower bunker prices have, as expected, caused a slight increase in speeds among bulker players in the last quarter of 2014. This has reduced the breakeven rate of speeding up and as a result the peak season rate which a lot of companies rely on to boost earnings for the year, is not as pronounced as before.
Credit Suisse managing director and head of Asia-Pacific Transport Research Tim Ross in contrast sees quite a profound impact on liner companies of lower bunker prices going into the first half of this year. This will be caused by the time lag between lower priced bunker inventory and when bunker adjustment factors kick in.
On another of the hot topics of the last year, HSBC Regional Transport director Parash Jain noted not just the widely reported US West Coast port congestion but also in ports throughout Asia. He said the impact would be negative for the lines if these conditions are for a short period of time because they have to bear additional costs of dealing with the congestion.
However, if congestion exists for longer than two months then it could benefit them as it allows them to both absorb some excess capacity in their networks as well as present the chance to charge some additional fees to shippers as seen in the spikes in the US East Coast freight rates during the period.
In 2015, if there is a “reasonable” peak season Jain expects to see “a lot of noise around port congestion” and that the lines will also start factoring in port congestion charges into their annual rate negotiations.
On tonnage oversupply in the dry bulk sector Erasmus Shipinvest managing partner and ceo John Su said: “The capesize market is experiencing a very, very tough moment.” He noted how some 2000-built capesizes are already being scrapped as well as recent anecdotal evidence of a Japanese-built newbuilding going straight from the yard into layup.
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