LONDON's Drewry Maritime Research has found that despite carrier attempts to subtract capacity from east-west routes, persistently weak cargo volumes have undermined recent rate increases to raise freight rates.
"Carriers' reluctance to pull capacity suggests many still have an eye on trade share. Carriers seem to want to have it both ways," said Drewry's chief container analyst Neil Dekker.
"Core trade lanes are undergoing a major upgrading process with over forty 10,000 TEU vessels delivered in 2012 at the same time when they are refusing to lay up or idle significant tonnage," he said.
It is doubtful that carriers will be able to continue to repeat the rate increase successes of last March if they rely solely on an industry collective resolve, he said, adding that more operational alliances are likely to result from this impasse.
Drewry's latest Container Forecaster said the success of the March 2012 rate increases that restored rates above the break-even point, has not been repeated in seven attempts to increase prices since.
During this period, average headhaul freight rates have declined from $2,700 in early March to $2,400 in early January 2013, said the Container Forecaster.
"While this is not a disaster for the carriers, it proves that there is a fundamental weakness in the market compounded by low volumes on the back of a non-existent peak season last year," the report said.
Said Mr Dekker: "The emphasis on missed sailings will only lead to severe volatility in the spot market with carriers reacting to weaknesses on a temporary basis, with the GRIs [general rate increases] being used to prohibit further rate erosion rather than advancing them by any sustainable margin."
More optimistically, Drewry predicted global demand would increase 4.6 per cent this year. But with faster capacity growth, carriers can no longer rely on rapidly growing north-south trades from Asia to Latin America to "prop up the deficiencies elsewhere".
Because successes enjoyed in the 2012 second and third quarters of 2012, carriers have forecasted collective profits of $1.5 billion.
"If carriers continue to engage in sensible cost cutting and manage capacity at trade route level, which will probably involve more radical lay ups, and projections on global GDP growth ring true, they could make a profit approaching $5 billion in 2013," he said.
"Carriers' reluctance to pull capacity suggests many still have an eye on trade share. Carriers seem to want to have it both ways," said Drewry's chief container analyst Neil Dekker.
"Core trade lanes are undergoing a major upgrading process with over forty 10,000 TEU vessels delivered in 2012 at the same time when they are refusing to lay up or idle significant tonnage," he said.
It is doubtful that carriers will be able to continue to repeat the rate increase successes of last March if they rely solely on an industry collective resolve, he said, adding that more operational alliances are likely to result from this impasse.
Drewry's latest Container Forecaster said the success of the March 2012 rate increases that restored rates above the break-even point, has not been repeated in seven attempts to increase prices since.
During this period, average headhaul freight rates have declined from $2,700 in early March to $2,400 in early January 2013, said the Container Forecaster.
"While this is not a disaster for the carriers, it proves that there is a fundamental weakness in the market compounded by low volumes on the back of a non-existent peak season last year," the report said.
Said Mr Dekker: "The emphasis on missed sailings will only lead to severe volatility in the spot market with carriers reacting to weaknesses on a temporary basis, with the GRIs [general rate increases] being used to prohibit further rate erosion rather than advancing them by any sustainable margin."
More optimistically, Drewry predicted global demand would increase 4.6 per cent this year. But with faster capacity growth, carriers can no longer rely on rapidly growing north-south trades from Asia to Latin America to "prop up the deficiencies elsewhere".
Because successes enjoyed in the 2012 second and third quarters of 2012, carriers have forecasted collective profits of $1.5 billion.
"If carriers continue to engage in sensible cost cutting and manage capacity at trade route level, which will probably involve more radical lay ups, and projections on global GDP growth ring true, they could make a profit approaching $5 billion in 2013," he said.