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.
The decline in container rates has now reached 25 percent since August on the crucial Asia-Europe trade. This development puts pressure on container carriers, not least Maersk Line. Fearnley lowers its expectations for the full-year 2018.
The container carriers' higher freight rates do not constitute an actual problem for Danish freight forwarder Scan Global Logistics. But the CEO tells ShippingWatch that he hopes prices will soon stabilize.
Spot rates from China to South America rose to their highest level since 2009 after a doubling over the last three months. North-to-South rates weighed down Maersk Line in particular in the first three months of the year.
An improved profit of no less than USD 1 billion for 2017 may sound like a bold prediction from Maersk Line, but Danish and international analysts speaking to ShippingWatch all seem confident that CEO Søren Skou is on track to reaching his goal. The group's first quarter results will be released Thursday.
Spot rates on the key container tradelane Asia-Europe took a big dive last week, according to a survey from Drewry. The firm expects the rates to keep sliding as there is by now more space available for shippers.
Last year's contracts between carriers and shippers were signed at historically low prices when comparing contract rates and spot rates. There could therefore be major rate increases in store when new contracts are negotiated in May.
Spot rates on the 11 major East-West routes between Asia and Europe climbed to a 20-month high this week, according to Drewry's World Container Index. Further rate increases are expected in the week to come.
A significantly improved operating result is in store when Maersk publishes its third quarter interim report on Wednesday, projects analyst firm Fearnleys in the wake of the collapse of competitor Hanjin, which has sent container rates soaring.