[161110.EN.SEA] Weighing Up The Importance of Full Vessels vs Higher Freight Rates (part 2/2)

 RECENTLY in The Container Shipping Manager we began to look at the age-old dilemma that shipping lines face in running their business—should a carrier focus more on filling its vessels or on revenue.

In our first study in this four-part series we looked at whether it made more sense to sacrifice your load factor in preference of a rate hike or sacrifice your revenue per box to fill your ship on the Asia-Persian Gulf

trade.

When we looked at the current realities of the trade, the answer was clear—a revenue-per-box focus wins out over a fill-the-vessel management strategy.

Today in The Container Shipping Manager we will look at whether this is also the case on the Asia-Pacific Southwest (PSW) trade…

As we did for part one of this series, today we will calculate the carrier’s vessel operating cost, which is represented by the two most significant cost factors facing the shipping lines—bunker and time charter costs. We will then measure this against a variety of load factors and

freight rate levels.

To recap, the general rule here is that in the slack season a carrier has two options:

1) If the carrier wants to maintain or even increase its vessel utilisation then it must be prepared to reduce its freight rate

2) If the carrier wants to maintain or increase its freight rate, it must be prepared for lower vessel utilisation

The question then stands, which option is more profitable, or at least, less damaging in a slack market?

The PSW trade has received a lot of attention this year with an influx of new services starting up, and some still to come.

Source : CSM, 11.11.10.