[240211.EN.SEA] Intra-Asia Trade: A Double Edged Sword For Carriers (part 2)

THE Intra-Asia trade today is the biggest trade in the world, surpassing even the transpacific and Asia-Europe trades, which carriers rely so heavily on for their profits year after year.  And while it may be the world’s biggest trade, we also found in part one of our series on the Intra-Asia trade that we started last week that it is perhaps the most volatile and unpredictable trade out there.  Last week in The Container Shipping Manager we looked at the movement in freight rates on the Intra-Asia trade compared with other trades and found that rates vary far more on the trade than others.  Today we will take our study a little further and look at operating cost versus revenue on the trade to see the potential for profit by looking at one existing service on the Northeast Asia to Southeast Asia trade… As in previous studies, operational expenses will be represented by time charter rates and bunker costs, while revenue will be based on the spot market rate on the southbound leg of the trade from Shanghai to Singapore, which is where most of the money is earned on this particular service. As such, we will also focus on the operating cost of the southbound leg only.  In the below table we can see the parameters of our service today, which has the following port rotation:  Ulsan – Busan – Kwangyang – Shanghai – Hong Kong – Port Kelang – Singapore – Pasir Gudang – Hong Kong – Ulsan In our next table we can see the time charter rates and bunker price throughout the course of 2010, which gives us an idea of the operating costs and fluctuations in the market the operators have been up against.

Source : CSM, 05.01.11.