BOTH transpacific and Asia-Europe trades have had their fair share of casualties this year, in the form of carriers suffering significant financial losses on both trades to date.
But while the two trades do share a common problem—weak demand growth, strong capacity growth—the carriers are still responding differently.
Transpacific carriers have moved to layup 10 per cent of trade capacity, or 55,000 TEU to date, since the summer shipping season, while on the Asia-Europe trade carriers have only idled six per cent of their ships, according to recent Alphaliner data.
Looking solely at the transpacific trade, Alphaliner is projecting a full-year financial loss of US$800 million across the trade for 2011. This is thanks to a 20 per cent decline in freight rates since the beginning of the year.
Shipping lines have only recently made moves to help stem the flow of red ink with a total of 14 services being in the latter stages of this year, equating to 18 per cent of all Asia-US west coast services.
Carriers big and small are feeling the impact of the harsh operating environment, but the little guys have been hit the hardest.
The six newcomers that entered the market in the past two years are looking at losses of up to $150 million.
Four of them—The Containership Company (TCC), CSAV, Horizon Lines and Grand China Shipping—have announced their withdrawal from transpacific trade owing to huge losses. There is yet further rumours circulating about one other company that may exit the trade, but details on this are still scarce.
Horizon Lines announced earlier a loss of $44 million in the first nine months of 2011 and is expected to take a further $105 million restructuring charge for terminating its transpacific service.
Source : CSM, 17.11.11.
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