Home » Breaking News, Maritime » Reports: Strong earnings not coming despite freight rate rebound
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box shipThe global shipping industry’s performance is expected to decline by 5 percent to 10 percent during the coming years due to oversupply and high bunker oil prices, according to a market research company.

“A sustained oversupply of vessels combined with high bunker oil prices will pressure margins in most shipping segments,” forecasts Research and Markets in its recently published “Global Shipping Industry 2013—Forecast, Trends & Opportunities”  that gives an outlook till 2015 on the global shipping industry,

It added that while box freight rates for the container segment have rebounded since March 2014, no strong improvement in earnings may be expected for the full year.

“This reflects sustained high bunker oil costs and pressure on container rates stemming from recent increases in deployed tonnage of box ships,” said the report.

This echoes a recent Clarkson Research Services paper that says liner shipping companies have been experiencing volatility in freight rates that creates unpredictable earnings.

“Liner shipping companies are responsible for operating the world’s 5,087-strong containership fleet. They own 52% of the capacity and charter in the rest from independent owners. In principle they then turn a profit on this by transporting containers around the world for cargo shippers,” said the report.

But Clarkson noted that since 2009, freight rates, particularly on the peak legs of the two largest main lane trades, the Far East-Europe and the trans-Pacific, have actually been showing increased unpredictability, as fleet capacity began to gain a great surplus. And in tandem with elevated fuel costs, overcapacity has been effectively pushing rates down, it added.

Photo: MGSpiller

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