THE rate of decline in container shipping has slowed, but it is still in the "distress zone" by the standards of the Altman Z-score for publicly traded companies, says a study by Detroit-based consults AlixPartners.
The study was based on a review of the financial results from 15 carriers in the 12 months ending on September 30, 2014 to estimate results for the full year, reported American Shipper.
"Carriers looking to change their fortunes should focus on the container shipping business by continuing to divest of noncore assets and by closely scrutinising the profitability of the markets they serve, the routes they sail, and the customers they conduct business with," said the AlixPartners report.
"The data carriers require to make smarter decisions exists, and most of it exists within their systems," the firm said.
"It's just a matter of putting all the pieces together in a way that leads to the insights required to manage commercial decisions more effectively.
"The challenge of putting the pieces together is not new, but to a large degree the solution is. In recent years, great advances have been made in the tools and techniques required to capture, store, and manipulate large data sets from disparate systems - a trend commonly referred to as big data," the company said.
AlixPartners said carriers had taken on huge debt to build larger, more fuel efficient ships at a time when "demand has languished, causing a significant imbalance that has plagued carriers looking to right their balance sheets."
But the 15 publicly traded companies whose figures it studied saw total debt decrease from $107 billion in 2013 to $91 billion at September 30, 2014.
"The benefits of slow steaming have narrowed, causing carriers to speed up their vessels to increase throughput and revenue," said the firm.
"Unless carriers are going to counter the effects of increased service speed by way of reducing or idling excess capacity, this increased capacity will likely have a continued dampening effect on carriers' ability to increase freight rates," it said.
WORLD SHIPPING
19 March 2015 - 10:09
Most listed ocean carriers in financial 'distress zone'
THE rate of decline in container shipping has slowed, but it is still in the "distress zone" by the standards of the Altman Z-score for publicly traded companies, says a study by Detroit-based consults AlixPartners.
WORLD SHIPPING
19 March 2015 - 10:09
Consultant study: Most listed ocean carriers in financial 'distress zone'
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