"Progress should not be over interpreted"
Following reasonable Q1 accounts from the leading container shipping companies, the positive development apparently continues in Q2, with two-digit percentages progress. But Lars Jensen, SeaIntelligence Consulting warns against over interpreting the results.
It’s looking tremendous with revenue growth of two-digit percentages which Orient Overseas Container Lines (OOCL) has just published. But there is good reason to pump the brakes because the comparison is in comparison with 2016, which marked an absolute low point for container shipping companies.
Lars Jensen, CEO and partner of SeaIntelligence Consulting, points out that it is more meaningful to compare the results with corresponding periods in 2015, as the global supply and demand situation was more comparable to what we are seeing now.
"From a sales perspective, OOCL is back at the 2015 level - in fact, it’s up by 3 percent. But the challenge here is that it takes place based on a volume that is up 14 percent. This is a continuing challenge in the market - not just for OOCL," Lars Jensen writes in his blog on linkedin.
He points out that we have still not seen Q2 developments for other container shipping companies, but to the extent that the OOCL result can be seen as a market indicator, it is clear to see the challenges - and why market observers should not be left behind by the percentage growth compared to 2016.
"Asia-Europe rates have risen by 33 percent compared with 2016, but only by 3 percent compared to 2015. This is not bad as larger ships have reduced the cost base and thus certainly improved profitability compared to 2015, but perhaps not as spectacular as the 33 percent increase from 2016 seems to indicate," Lars Jensen wrote.
Intra-Asian rates have risen by 16 percent compared with 2016, but remains 5 percent below the level in 2015, while rates over the Pacific aren’t doing too well. They have increased by 4 percent compared with 2016, but is 26 percent lower than in the same period in 2015.
"And while growing ship sizes will also reduce the cost of this trade, it's hard to believe that unit costs have fallen by 26 percent in two years," Lars Jensen points out.
Source: Lars Jensen, Linkedin / Maritime Denmark