China's Golden Week holiday traditionally marks the beginning of the low season for container lines. But this year demand is expected to be so strong that it can withstand this traditional pressure, says US-based finance firm.
EU has earlier in the coronavirus process issued a warning to the container lines that are now facing criticism for having used the crisis to force prices up. But beyond this, the EU competition regulators will not interfere, ShippingWatch has learned.
Shipping lines may need to blank even more sailings between Asia and North America for the Chinese holidays in early October, when factories shut down and container demand is expected to drop, writes Sea-Intelligence.
China decided to summon container lines to a meeting in the same week that rates on key routes from China to the US climbed to record highs. Freight to Los Angeles has increased by 185 percent in a year, writes Jefferies.
There seems to be a paradox unfolding these days, as rates on the Pacific are headed for record highs, while shipping lines are rushing to redeploy ships. Consumer behavior has changed completely, notes Sea-Intelligence.
Container rates have just reached the highest end-year level in five years. The level could continue into the new year, which according to Jefferies is good news for Maersk and its competitors. One of the reasons is a new billion-dollar expense, which customers now have to foot the bill for.
High fuel prices and the upcoming sulfur regulations mean that rates will need to go up even further if the container shipping lines are to become profitable in the years to come, concludes Seaintelligence.
When Maersk on Wednesday presents its results for the third quarter, the operating profit (EBITDA) will show an increase, projects investment bank Jefferies. Container rates have reached the highest level since 2014.
Maersk Line, Cosco and Hapag-Lloyd are, according to Bloomberg News, among the most vulnerable companies in regard to revenues in 2018, due to a toxic cocktail of increasing bunker fuel prices and falling rates.