High Shipping Costs Are Here to Stay, Says Bloomberg
By Henry Ren (Bloomberg) Stubbornly high shipping expenses for businesses are getting sealed into contracts for the next 12 months, forcing companies to pass the extra costs on to consumers....
China Shipping Container Lines (CSCL) released their 2013 annual report today, and with it, revealed a year that showed major financial losses to the company due to a continued mismatch in the supply/demand equation for container shipping.
“Shipping companies continued to face a severe operating environment,” commented CSCL Chairman Zhang Guofa in the report. In 2013, the China Containerised Freight Composite Index average fell 7.6 percent to 1,081.8 as compared with 2012.
Guofa notes that according to Alphaliner, it is estimated that there will be a 5.5% increase in the global container shipping capacity in 2014 resulting in a narrowing of the supply/demand balance.
Even with slow steaming and the scrapping of ships however, “the imbalance in the overall supply and demand in the shipping market cannot be practically improved in the short run,” comments Guofa. The trend toward alliance-building “will be further explored.”
CSCL reports their average freight rate per TEU on a group level was RMB 3,709, representing a drop 7.6%. On CSCL’s international trade lanes however, they recorded a 13.5 percent drop to RMB 5,172.
Overall in 2013, the company recorded a gross loss of RMB2,086,858,000 (USD $333 million) compared to a loss of RMB 462,858,000 (USD $74 million) in 2012.
Taking advantage of reduced shipbuilding prices and following the trend for bigger ships (and thus lower cost per TEU), CSCL ordered five of the largest containerships to date this past year from Hyundai Heavy Industries, each with a capacity to handle 19,000 TEUs.
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