Box lines Eye Green Shoots of Recovery

THERE is little doubt that the downturn that has pummelled the container shipping sector over the past two years is past its worst.

News ID: 76209

Date: 11 September 2017 - 13:31

According to MANA, Industry bellwether and market leader Maersk Line managed to turn a profit in the second quarter, as did a number of other major lines, particularly those in Asia. And for the lines that did not return to the black, at least losses were minimised.

One could be forgiven for thinking that carriers had found the magic formula for making money again, but one would almost certainly be mistaken.

Despite talk of financial discipline, cost-cutting and efficiency drives, the return to profit by most lines has been driven by the simple metric of improving trade figures. There are more boxes to go around and — thanks to the absence of Hanjin Shipping and the mergers and acquisitions that have completed in the past year or which are in the process of completing — there are fewer lines competing for business.

In other words, it would have been relatively difficult to not make money in the past quarter.

Nevertheless, the atmosphere at the Global Liner Shipping conference in Singapore at the start of this month was one of the more optimistic seen in recent years. Container shipping, it seems, has a spring back in its step again.

There are, however, still some dark clouds on the horizon. The orderbook overhang still looms large over the market, with a significant amount of capacity due to enter the market next year. Moreover, scrapping has slowed in recent months, reversing a trend in capacity management that had provided some relief. And after two years of virtually no box ships being ordered, carriers are returning to yards in the expectation that more tonnage will be needed in two years’ time, when the ships slip out of the yards.

Whether these vessels will be required by demand then remains to be seen. But for now, container shipping is enjoying an uptick as it eyes the green shoots of recovery. After the past two years, it could do with a break.