and demand tightening, profitability in the liner industry is assured this
year, according to Drewry.
consultant said its latest analysis shows that strong cargo growth, driven by
vigorous retail restocking, will result in global demand growth this year of
some 4 per cent, compared to a capacity increase of about 3 per cent. "The
tide of low freight rates is reversing," said Drewry, forecasting an
average, across-the-board 16 per cent hike in rates, with yet more increases to
come, and "much higher contract rates on some routes".
during the firm's Container Market & Freight Rate Outlook webinar
presentation, Director Philip Damas said there was no doubt that investors in
container shipping would make money this year, estimating a 12-month cumulative
industry profit of about US$5 billion.
the rush of M&A activity in the past two years as a "super-cycle"
of carrier consolidation, Drewry says the Cosco-OOCL deal, along with other
mergers and acquisitions, has "changed the playing field", leaving
shippers with much less choice.
said: "In effect, we have moved from an industry where we used to talk
about the top 20 carriers, to 2018 when there will be just 11 left from this
we suggest, will have very deep repercussions on the entire industry; on
shippers, suppliers and terminals.
Also on the
level of competition between the carriers, where an industry that is moving,
quite frankly, towards an oligopoly, will give carriers much more control than
in the past."
the forecast for fleet growth for 2018 looked higher, at 5 per cent, as a
consequence of the push back from several ultra-large container vessel (ULCV)
deliveries this year - although at this stage, with demand at around 3.5 per
cent, the analyst did not expect the gap to have much of an impact on rates
the forward container vessel orderbook is "almost dead", noted
Drewry, a factor that will certainly encourage investors as they smell the
opportunity for significant returns.
There is a
big risk for shippers from the wave of M&A activity, said Mr Damas urging
them to "rethink" their current strategy of long- or short-term
contracts combined with use of the spot market, if they did not want to pay the
price of significantly higher freight rates.