Container Lines Will Save $5.5B on Their Bunker Costs in 2013

Oversupply of vessels continues to create problems for the industry

Ocean container carriers will save $5.5 billion on fuel this year thanks to lower bunker prices, the slow steaming of vessels, the introduction of more fuel-efficient ships, and the growing Russian bunker market, Drewry Maritime says in its annual Container Market Annual Review and Forecast.

The firm says carriers have been facing weak fundamentals, including a continuing overcapacity in the Asia to North Europe routes that have caused spot rates to fall in 33 out of 39 weeks so far this year.

Companies have responded with network changes, slow steaming, and the addition of more fuel-efficient ships, as well as shifting bunkering to Russian ports where prices are low.

Drewry says there seem to be "considerable gaps" between high- and low-performing lines, possibly due to savings realized by operators with the largest vessels.

The North-South trade routes are suffering due to the "cascade" of tonnage, as carriers shift ships to new routes to make room for new, very large ships on the Asia-Europe routes.

"Rates in the once-stellar Asia to East Coast South America trade have fallen 61% to $780 per teu [twenty-foot equivalent unit] this year," Drewry said.

"And in the Asia to Australia trade, they have plummeted 65% to an unsustainable $400 per teu in the same time frame."

Next year's global fleet growth is predicted to be 7.4 percent.

"Unless carriers limit capacity growth at the trade route level to realistic market levels, they run the risk of ruining the trade lanes that they see as the future," Drewry said.

"We do not forecast annual global trade growth rising above 6% between now and 2017, and so carriers need to find another way of defending their profitability beyond the futile monthly GRI [general rate increase] attempts."

Drewry praised the formation of the P3 alliance, which aims to stablilise the supply of vessels, but said more work is needed.