[151110.ID.SEA] Weighing Up The Importance of Full Vessels vs Higher Freight Rates (part 1/2)

OCEAN carriers have enjoyed three straight quarters of profitable results on the back of surging demand growth and freight rates, while capacity remained tight. But as we head into the final quarter, the optimism that
was present earlier in the year is now beginning to wane.

Mid to long haul carriers saw the most dramatic upswings in freight rates, but with softening demand now emerging, they too face the most challenging environment.

The greatest danger facing these carriers is that the difficult operating environment may see them turn again to the old practice of chasing market share rather than profit—in other words, filling the ship at any cost
versus chasing profitable cargo only.

Today in The Container Shipping Manager we will look at the age-old debate between maintaining freight rates versus raising a carrier’s load factor on the mid to long haul trades.

We will break this study into four parts over the coming weeks:

1) Hypothetical study on Asia-Persian Gulf trade with five-vessel deployment.

2) Hypothetical study on Asia-Pacific Southwest trade with six-vessel
deployment.

3) Hypothetical study on East Coast South America trade with 10-vessel
deployment.

4) Hypothetical study on West Africa trade with a 12-week turn time.

Today we will look at whether load factor or rates is the most important focal point for the Asia-Persian Gulf trade, and at what point one is more important than the other.
 

(To be continued to: part 2/2)

Source : CSM, 27.10.10