World News
Mega-Alliances, Cost Control Key to Box Ship Segment Recovery as Rates Decline
The recovery of the container industry will rely heavily on new mega-alliances within the industry and on the continued reduction of unit costs, according to Drewry's annual review and forecast of the box ship segment.
Drewry's expects that due to an influx of new vessel orders that will be delivered over the next two years, freight rates are unlikely to rise, and are in fact expected to decline in 2015 by as much as 3-4% year-on-year.
Instead, companies are expected to focus on driving down costs.
"The possibility of matching supply and demand to a degree acceptable for carriers in 2015, especially at the critical trade route level and in key North-South trades is probably out of reach," said Neil Dekker, Drewry's director of container research.
"The strategy of course is to drive down unit costs, but this will not necessarily result in considerably better utilization (since all lines upgrading), nor in freight rates."
The formation of new mega-alliances such as 2M and Ocean Three are expected to help companies reduce costs as shipowners share in vessels and trade routes.
Drewry's also estimates that almost 100 ultra-large container vessels (ULCV) are expected to be delivered in 2015 and 2016, along with roughly the same amount of ships between 8,000 twenty-foot equivalent units (TEU) and 10,000 TEU.
As result, it is expected that unit costs will go down even further and there may be excess capacity on some routes.
"In essence, the industry is merely continuing to adapt as best it can," Dekker said.
"This is about survival and the long-term management and sharing of costs."
Maersk Line and Mediterranean Shipping Co. (MSC) made the 2M deal this summer after an earlier agreement which also included CMA CGM was axed by Chinese regulators.
CMA went on to join the Ocean Three alliance with China Shipping Container Lines Co. (CSCL) and United Arab Shipping Co. (UASC).
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 627.00 | 2.00 | 737.00 | 5.00 |
| Rotterdam | 579.00 | 1.50 | 753.50 | 14.00 |
| Houston | 587.50 | 7.50 | 764.50 | 2.50 |
| Fujairah | 622.00 | 6.50 | 881.50 | 3.00 |
| Global 20 Ports Average | 646.00 | 0.50 | 825.50 | 1.50 |
| Global 4 Ports Average | 604.00 | 2.50 | 784.00 | 4.50 |
| Global Average Bunker Price | 700.00 | 3.50 | 883.00 | 3.00 |
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