[280810.EN.SEA] Asia-Europe Freight Rates Drive Shipping Lines 1H Profits

SHIPPING LINES have bounced back from last year’s US$15 billion loss with positive first half results.  While cost efficiency, better productivity and service delivery were popular reasons for many shipping lines stepping back into the black, a major catalyst for the positive results was an increase in freight rates on the Asia-Europe trade, according to Alphaliner.  The recovery rate of carriers has been greatly influenced by their “trade mix”, the group said, stating that carriers that had the “largest” presence in the Asia-Europe trades made the largest gains in the first six months.  Among carriers that declared their results, Orient Overseas Container Line’s (OOCL) container business recorded an operating profit of $303 million in the first half compared to APL’s $13 million and Hanjin’s $118 million operating profit in the same period.   OOCL's operating profit benefited from its higher exposure to the Asia-Europe trade and relatively smaller presence in the transpacific...  Asia-Europe freight rates reached profitable levels in December 2009 after hitting the bottom in the second quarter of last year.  Chartering an uneven trajectory of recovery, Asia-Europe rates by August 9 were reported to have “recovered by over 100 per cent in the last 12 months” after being “below breakeven levels for much of 2009”. OOCL, whose Asia-Europe trade volumes grew 10.9 per cent year on year in the first half compared to a 17.7 per cent increase in Intra-Asia and Australasia trades, saw revenues from the former trade grow 106.4 per cent year on year in the same period against a 42.3 per cent increase in revenues from the latter.  It devoted just 29 per cent of its capacity and drew only 26 per cent of its throughput from the transpacific trade. On the other hand, Neptune Orient Lines' (NOL) container subsidiary, APL’s, profits were low in the first half when compared to other carriers due to its 'disproportionately' huge presence in the transpacific trade, where freight rates became profitable only in May this year.  APL deploys 47 per cent of its fleet capacity and draws 32 per cent of its throughput from the transpacific trade, according to Alphaliner.  Low transpacific rates also financially 'drained' Hanjin, which deploys 39 per cent of its fleet capacity and derives 49 per cent of its throughput from the transpacific trade.

   

    Source : CSM, 17.08.10.