Ocean container carriers are losing money on key trade lanes, including the Asia-Europe route, as margins come under increasing pressure from rising fuel prices and weakening freight rates, according to Aphaliner.
Bunker fuel prices have surged 24 percent since January, with the price of 380 fuel oil hitting $609 per metric ton in Rotterdam last week, the highest level in 29 months, the Paris-based analyst said.
At the same time, spot freight rates have slumped 14 percent over the past eight weeks with the rate for shipping a 20-foot container from Shanghai to north Europe slipping to $1,200 from $1,400 at the end of last year.
Spot rates from Shanghai to Europe have declined 37 percent from their peak in mid-July 2010 when they hit $1,900 per 20-foot container.
Bunker fuel surcharges, which currently range between $530 and $680 per 20-foot container for Far East-Europe shipments, would have to rise to over $700 if fuel prices remain at current levels.
This would leave the base freight rate -- excluding the bunker surcharge -- at only $500 per 20-foot container if spot rates don't strengthen over the coming weeks.
This is "well below" the estimated $600-$800 per 20-foot box required to break even on the Far East-Europe trade, according to Alphaliner.
While most carriers have reported positive financial results for the fourth quarter of 2010, earnings could turn negative in the current quarter.
The key lines on the Asia-Europe trade are currently operating at below break even levels, based on Alphaliner estimates.