The container shipping industry is contending with the longest stretch of near-zero rates in its half-century history on the Asia-to-Europe route, as a capacity glut combines with the slowest growth in trade since 2009.
Commerce on the world's second-busiest container route rose 4.2 percent in the second quarter, the weakest since the end of 2009, Woking, England-based Container Trade Statistics estimates, reported Manila Bulletin.
Rates excluding fuel surcharges were "practically'' zero in July and little changed this month, the worst run ever, said Menno Sanderse, an analyst at Morgan Stanley in London.
While growth in container volumes has slowed for four consecutive quarters, it's still nowhere near the 22 percent contractions seen in the first half of 2009. Europe normally imports more goods this quarter as shops begin stockpiling for the December holidays. That gain may be curbed this year as retailers anticipate mounting concern about economies and jobs will hurt consumer spending.
"If you're a large retailer and you have this turmoil, you're going to be worried,'' said Lars Jensen, chief executive officer of Copenhagen-based SeaIntel Maritime Analysis, which advises shipping companies and ports. "Will people shop or not for Christmas or will they shop more or less than usual? The more uncertain you are, the more you are likely to err on the side of caution on the procuring side.''
Container trade on the Asia-Europe route will expand by an average of four to six percent this year, compared with 15 percent growth in fleet capacity, according to Morgan Stanley.
The cost including surcharges of hauling a 20-foot box from Shanghai to northwest Europe was last at US$839, 61 percent down from the peak of $2,165 reached in March 2010, said Mels Boer, a freight derivatives broker in London. He cited a weekly index produced by the Shanghai Shipping Exchange.
Equity analysts are increasingly bearish on what slowing trade growth means for company earnings. A P Moeller-Maersk, the world's biggest container-shipping line, will report a 25 percent slump in net income to $3.8 billion this year, the mean of 16 estimates compiled by Bloomberg shows.
While the median estimate fell 21 percent since the start of the year and shares of the Copenhagen-based company tumbled 32 percent, just four of 24 analysts tracked by Bloomberg rate the stock a "sell''.
The industry may lose $2.5 billion to $3 billion this year, said Philip Damas, director of liner shipping and supply chains at Drewry Shipping Consultants in London. Owners and operators lost $20 billion in 2009, when the global container trade contracted for the first time ever, he said.
The Asia-to-Europe container route is exceeded only by trade from Asia to the US West Coast and accounts for about nine percent of annual global shipments of 139.9 million TEUs, according to London-based Clarkson, the world's biggest shipbroker.
There are 355 ships working the route, Containerization International, a London-based provider of data and analysis, estimates. Westbound trade is more than double the volume of goods going east.
Carriers are cutting services and idling more ships to trim capacity and bolster rates, Paris-based BRS-Alphaliner, a data provider for the industry, said.
CONTAINER
04 September 2011 - 08:34
Asia-Europe shipping slump hits 50-year low
The container shipping industry is contending with the longest stretch of near-zero rates in its half-century history on the Asia-to-Europe route, as a capacity glut combines with the slowest growth in trade since 2009.
CONTAINER
04 September 2011 - 08:34
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