The first tangible evidence that the container liner industry is on course for a profitable year comes from Chinese carrier Cosco, which expects a half-year profit of $272m.
Cosco, the world’s fourth-biggest carrier, told the Shanghai Stock Exchange yesterday it was forecasting an interim H1 net profit of about Rmb1.85bn, compared with a loss of Rmb7.2bn in the same period of last year.
“Freight rates for container shipping operations have increased year-on-year,” Cosco said in a statement to the bourse. “Container volumes have grown 34.7% and earnings have continued to grow from the base set in the fourth quarter of last year.”
In a recent spot market review, Drewry said freight rates “were more than one-third higher in the first-half of 2017”, following substantial increases across most tradelanes, which it described as a “huge correction after a disastrous 2016 for rates”.
The big question, however, is can the carriers sustain the rally into the second half of the year and beyond?
Drewry believes “the pendulum is swinging quite fast towards a carriers’ market”.
The consultant said: “With carriers on the verge of returning to profitability, thanks to these higher spot rates and improved contracts, combined with extra pricing power gained from M&A and stronger fundamentals, we think it highly unlikely that there will be a return to the pricing wars of early 2016.”
Patrik Berglund, chief executive of ocean freight rate benchmarking and data analyst Xeneta, agreed.
He told The Loadstar today he was “generally optimistic” about the liner industry and noted that the disappointing carrier results in Q1 were partly due to an overhang of low rates impacting the bottom lines of carriers.
Looking at the long-term market from Chinese main ports to North Europe, Mr Berglund said rates had moved “substantially up over the last nine months”.