Executive Briefings

With Discipline, Ocean Container Lines Will Be Slightly Profitable in 2013, Report Says

As expected the ocean container industry just about scraped over the break-even line in 2012, albeit only because of the results of a handful of leading lights. There is every chance that lines will make decent money in 2013, but only if they refrain from old habits and stick to pricing and capacity discipline.

Drewry's latest Container Forecaster report gives our headline industry operating profit estimate for 2012 of $280m. Clearly, this is a very poor return for moving nearly 170 million TEU of loaded containers, although any sort of profit seemed highly unlikely after the heavy losses sustained in the first quarter of 2012.

It also represents a significant improvement on the estimated $7.7bn loss endured in 2011. Whether or not carriers are satisfied is debatable.

Spooked by that awful start to the year, carriers avoided another 2009- and 2011-esque financial meltdown and turned things around through a combination of prudent capacity management and unity on freight rate increases.

Worryingly for carriers, the revival in fortunes that saw all carriers back in the black for the third quarter has quickly dissipated and many lines lost money again in the fourth quarter.

Despite the unenviable supply-side pressures, carriers do have the fundamentals to be able to make money in 2013. The chastening boom and bust experiences of the last five years should motivate them to do what is in their best interests.

Source: Drewry

Drewry's latest Container Forecaster report gives our headline industry operating profit estimate for 2012 of $280m. Clearly, this is a very poor return for moving nearly 170 million TEU of loaded containers, although any sort of profit seemed highly unlikely after the heavy losses sustained in the first quarter of 2012.

It also represents a significant improvement on the estimated $7.7bn loss endured in 2011. Whether or not carriers are satisfied is debatable.

Spooked by that awful start to the year, carriers avoided another 2009- and 2011-esque financial meltdown and turned things around through a combination of prudent capacity management and unity on freight rate increases.

Worryingly for carriers, the revival in fortunes that saw all carriers back in the black for the third quarter has quickly dissipated and many lines lost money again in the fourth quarter.

Despite the unenviable supply-side pressures, carriers do have the fundamentals to be able to make money in 2013. The chastening boom and bust experiences of the last five years should motivate them to do what is in their best interests.

Source: Drewry