The average containership load factor across the main headhaul East-West trade routes, adjusted for void sailings, was 86%, down from 90% in the previous quarter and from 89% a year ago, Drewry’s updated first-quarter 2015 data shows. The drop comes on the back of a rather bleak picture for container lines with a toxic mixture of overcapacity, weak demand and aggressive commercial pricing all colluding against them. However, according to Drewry, all data needs to be put in perspective and a figure of 86% should not automatically be considered a disaster. “And yet it has had the effect of making the lines completely forget about any rational pricing strategies and chase the rates down week on week in a vicious spiral,” Drewry said, adding that there is a noticeable supply gap over demand. Average load factors in the North-South trade lanes remain below 70% and for the first quarter there was an excess of supply over demand of more than seven percentage points. This is continuing the relatively poor performance of many trades last year and, as explained by Drewry, it is no great surprise now that carriers are having to cut capacity drastically, or are at least considering it. Combining the two indices together to generate a global overview reveals that first-quarter average load factors fell to 83% from 87% in the previous quarter and from 85% a year before. “The question the lines need to ask themselves is – are average headhaul load factors of 83% acceptable? If they are, then there is no need to keep destroying spot market rates, but we can only continue to work on the premise that lines still think about load factors and market share first, rather than profitability. And this is why the freight markets are being destroyed,” Drewry added. A global overview gives out an impression of the main characteristics, but what is happening at the trade route level determines how profitable carriers should be and where and how vessel assets are being deployed. Given the obvious impact of the orderbook, the effectiveness of carrier deployment is the key for the lines. Quite simply – if they get it right, they will earn enough revenue to at least cover OPEX, or the reverse will happen. “A tipping point in ship utilisation has been reached that is sending freight rates to the floor and making it almost impossible for carriers to hold on to any temporary GRI-induced gains,” the shipping consultancy firm concludes. -Source: worldmaritimenews.com
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The average containership load factor across the main headhaul East-West trade routes, adjusted for void sailings, was 86%, down from 90% in the previous quarter and from 89% a year ago, Drewry’s updated first-quarter 2015 data shows.
The drop comes on the back of a rather bleak picture for container lines with a toxic mixture of overcapacity, weak demand and aggressive commercial pricing all colluding against them.
However, according to Drewry, all data needs to be put in perspective and a figure of 86% should not automatically be considered a disaster.
“And yet it has had the effect of making the lines completely forget about any rational pricing strategies and chase the rates down week on week in a vicious spiral,” Drewry said, adding that there is a noticeable supply gap over demand.
Average load factors in the North-South trade lanes remain below 70% and for the first quarter there was an excess of supply over demand of more than seven percentage points. This is continuing the relatively poor performance of many trades last year and, as explained by Drewry, it is no great surprise now that carriers are having to cut capacity drastically, or are at least considering it.
Combining the two indices together to generate a global overview reveals that first-quarter average load factors fell to 83% from 87% in the previous quarter and from 85% a year before.
“The question the lines need to ask themselves is – are average headhaul load factors of 83% acceptable? If they are, then there is no need to keep destroying spot market rates, but we can only continue to work on the premise that lines still think about load factors and market share first, rather than profitability. And this is why the freight markets are being destroyed,” Drewry added.
A global overview gives out an impression of the main characteristics, but what is happening at the trade route level determines how profitable carriers should be and where and how vessel assets are being deployed. Given the obvious impact of the orderbook, the effectiveness of carrier deployment is the key for the lines. Quite simply – if they get it right, they will earn enough revenue to at least cover OPEX, or the reverse will happen.
“A tipping point in ship utilisation has been reached that is sending freight rates to the floor and making it almost impossible for carriers to hold on to any temporary GRI-induced gains,” the shipping consultancy firm concludes.
-Source: worldmaritimenews.com