Box Shipping Unlikely to Recover in 2012

Hamburg Süd is a key carrier on the North-South trade routes.

Hamburg Süd Group (Hamburg Süd) has echoed common industry opinion today, saying that 2011 was a tough year for shipping.

Bunker prices and overcapacity were cited as key reasons for lower freight rates and losses, saying industry experts had estimated that liner operators overall had to accept a loss of some $5 billion to $6 billion in 2011, after profits of some $14 billion in the previous year.

The Oetker Group member said continued high fuel prices could effectively not be passed on to customers by way of bunker surcharges "in view of the high pressure on revenue".

Rotterdam prices, it said, had risen over 35% over the year from below $500 per metric tonne (pmt) to $675 pmt by the end of 2011.

The Hamburg headquartered firm also commented that, in the medium term, the high fuel prices could also lead to older, high-consumption vessels being scrapped earlier than expected.

Today's press release said worldwide container shipments still rose approximately 8 per cent to some 150 million TEU, despite factors such as the European debt crisis, a weak U.S. economy, natural disasters, and political upheavals.

But the growth lagged behind capacity increase, and west trade lanes from Asia in particular had below-average development.

That overcapacity, which it says has been building up since mid-2008, has had a "strong downward pressure on freight rates".

Ironically, high fuel prices might actually be useful and help ease over capacity.

The company said that, should the liner companies move to "super-slow steaming" it would likely contribute to a reduction in overcapacity.

Additionally, it said, it can be observed that carriers are proceeding to abandon uneconomic routes and idling capacity.

Looking ahead, Hamburg Süd thought that even with a moderately positive development of the world economy and world trade, it will still be one or two years before global cargo volume and slot capacity regained equilibrium.

"Only very isolated positive signals can be detected for 2012. Whether a sustainable turnaround in the fortunes of container liner shipping will come about in the current year, however, cannot yet be said with any certainty," said Hamburg Süd.