The container ship industry started off 2015 on a positive note as demand seemed to take off, but the second half made a dramatic turnaround that saw earnings plummet, as the industry enters the new year facing severe downward pressure on rates, according to Clarksons Research.
Early in 2015, it looked as though things might at last be looking up. However, as vessel demand suffered a range of shocks from the world economy, the performance in the second six months of the year led to “a rapid evaporation of any positive sentiment,” said a new report from the market research service.
While average container ship earnings last year were 13% up year-on-year, 2015 suffered an abrupt downturn in the second half after a good first half.
Earnings “collapsed in the second half of 2015, driven by the cumulative impact of weakening demand trends,” said the report. Volumes on the key Far East-Europe trade contracted by around 4% last year, growth in intra-Asian volumes slowed to around 3% on the back of turbulence in the Chinese economy, and container imports into commodity-exporting developing economies also began to slow significantly in the second half.
“Accordingly, global box trade is estimated to have expanded by just 2.5% in 2015, a fairly weak performance,” said Clarksons.
The volatile box freight market was also subject to strong pressure, hitting fresh historical lows on more than one occasion during 2015. Robust deliveries of very large container ship capacity, with 12,000+ TEU capacity growing by 28% in the year on the back of 46 newly delivered units, did not help matters.
Clarksons predicts that in 2016, the overall freight market will remain under heavy downward pressure still.
Photo: CargoShip
