Queries and Theories
Questions directed to the CEOs of the very, very large container shipping lines:
1. How’s that “slow-steaming” gimmick working out for you so far? And tell us again about the emphasis you like to place on prompt and efficient service.
2. What about the 12,000, 14,000 and 16,000 TEU-size vessels you ordered back when you were fanning your corporate feathers? What’s that doing for your bottom lines? Does that have anything to do with the dramatic increase in laying up – and even the premature scrapping – of hundreds of perfectly good container ships?
3. And the VSAs (Vessel Sharing Agreements) – tell us again why you’re suddenly so eager to partner with your bitter rivals.
Never mind. We’re getting the answers from maritime sources and periodicals. Like these:
– Bloomberg (May 5, 2012) – “New Europe Ports Seen Unprofitable With Slump Deepening”
“Europe’s top container ports face a glut in capacity that’s set to crimp profit margins as new terminals ordered prior to the 2008 slump open for business.
“Harbors in northern Europe including Antwerp, Hamburg and Rotterdam, the continent’s top three, will increase annual capacity 21 percent to 62..2 million standard 20-foot containers by 2015, according to the data compiled by M.M. Warburg & Co.
“Handling fees charged by by port operators including Hamburger Hafen & Logistik AG and DP World Ltd. (DPW) may fall as new docks come on stream, Warburg analyst Christian Cohrs said. Europe will be hit harder than other regions as the sovereign debt crisis weighs on economic growth, stunting demand for imported goods …”
[“Slump Deepening … crimp(ed) profit margins … stunting demand …” – Sure signs of a recovery.]
– Cargo Business Wire (May 10, 2012) – “NOL Group posts $ 254 million loss for Q1”
“Singapore’s Neptune Orient Lines, parent to the seventh-largest shipping company in the world, APL, reported a $ 254 million loss for its first quarter, the fifth straight quarter in the red for the company. NOL posted a $ 10 million loss for the same period last year, and more recently lost $ 320 million in the fourth quarter …”
[According to NOL’s figures, 2011 began with a first quarter loss of $ 10 million, and escalated to a fourth quarter loss of $ 320 million. If 2012 began with a $ 254 million loss, and if the same rate of escalation persists for the rest of this year – NOL might be better off scrapping its whole fleet.]
– E-Cargonews Asia (May 11, 2012) – “Hanjin Shipping posts $ 295 million loss in Q1”
“According to Dow Jones Newswires, Hanjin Shipping, South Korea’s largest container carrier by sales, saw its first-quarter net loss widen from a year earlier … Hanjin said it would ‘adapt early peak-season surcharges in addition to other freight rate increase efforts, in a bid to counter the losses in the second quarter’ …”
[That’ll work. Raise the prices. That’s sure to promote demand.]
– The Journal of Commerce (May 14, 2012) – “Hapag-Lloyd Posts $ 172 Million First Quarter Loss”
“Despite bigger year-over-year loss for the period, German carrier forecasts full-year profit if it can increase rates …”
[Right. Raise your prices.]
– The Journal of Commerce (May 14, 2012) – “Economist: Full Export Recovery in China Far From Certain”
“IHS Global Insight’s Alistair Thornton said trading figures for April revealed domestic weakness has been compounded by bearish demand from key markets overseas, especially Europe. ‘Whichever way you slice them, export growth is weak, and import growth is weaker,’ he said …”
[It’s what we’ve been saying. Reduced demand from U.S. buyers translates into a slowdown from overseas suppliers, so that less goods are sent here, and reduced supplies means less demand, etc.]
– SHIPPING NEWS (May 14, 2012) – “CSAV widens quarterly net loss to $ 203 million as box volume drops 43 percent”
“Chile’s main ocean carrier, CSAV, the world’s 20th largest, posted a widening first quarter net loss of $ 202.9 million against the $ 182 million lost in the first three months of last year. The carrier handled 499,800 TEU in the first three months, down 43 percent …”
[That 43 percent reduction in volume is a drop from the 876,842 TEUs of a year ago.]
– SHIPPING NEWS (May 17, 2012) – “Maersk posts a quarterly loss of $ 599 million”
“Denmark’s AP Moller-Maersk Group has posted its first quarter results, which its container shipping unit Maersk Line suffered a $ 599 year-on-year loss … Group CEO Nils Andersen said the company is not satisfied with its first quarter performance … ‘However, our efforts to increase container rates are paying off ‘ he added …”
[$ 599 million in rate increases? That mighty “effort” is an impossible goal in today’s economy.]