Global box carriers are unlikely to find much respite from their troubles, as a survey of shippers find that most of them don’t believe that a robust third quarter is happening this year, citing slow global trade.
Results of a recent survey by maritime consultancy Drewry showed that nearly half of the 51 respondents expect volumes for the third-quarter peak season to be the same as last year’s, while another 35% anticipate lower volumes. Only 18% predicted higher volumes for container shipping’s busy period.
“The results of the survey confirm that international trade remains sluggish. They will also be disappointing news to ocean carriers, who are in need of a pick-me-up in another difficult and unprofitable year, and to terminal operators, many of whom have under-utilized capacity,” said Drewry.
While the ratio varies by trade, the third quarter has generally been the busiest period for the industry as retailers in the major consumer centers of the U.S. and Europe stock up on goods for the beginning of the school year and the winter holiday season that includes Thanksgiving, Christmas, and the New Year.
Between 2008 and 2015 the average proportion of annual world container volumes moved in the third quarter was 26.3%, ahead of 25.4% in the fourth quarter.
Traditionally, the third quarter is when carriers have been able to swell revenues through peak season surcharges (PSS), and congestion and equipment repositioning surcharges, among others.
But the analyst said that last year was practically a non-event in the high-volume westbound Asia to North Europe trade when the proportion of traffic only reached 25.8%, marginally better than the second quarter. The peak was more evident in the trans-Pacific headhaul routes.
The poor state of the global economy was the most cited reason for the lack of optimism. “We don’t expect any peak whatsoever given the capacity in the market and an overall subdued global economy,” one respondent told Drewry.
Carriers themselves appear to agree with the shippers’ outlook, as they have taken the unprecedented step of withdrawing services in key trades ahead of the peak season in a bid to support freight rates, said the research service.
The G6 Alliance will extend the suspension of their Asia-Europe Loop 6 service, while in the trans-Pacific the same carrier group is pulling it Asia-USWC CC1 service. Meanwhile, Cosco is terminating its AAC loop on the same route, and the Ocean Three alliance is reportedly ending its Asia-USEC Manhattan Bridge service.
“There will be no demand push to bolster carrier sales in the peak season so we expect more supply-side manoeuvres to push through GRIs/PSS,” Drewry predicts.
The survey was open to shippers and BCOs from May 27, 2016 to June 16, 2016. The majority of respondents, or 32, were small shippers while the rest were medium and large ones. The participants ship a wide range of commodities, mostly fast-moving consumer goods, in trades between Asia, North America, and Europe.
Photo: 0x010C
