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Big carriers see 2017 as turn-around year for container shipping

Data shows that in the last quarter, global container throughput at China’s eight major container ports grew four per cent, prompting a new optimism among liner executives.

Sharply rising spot rates lifted Asia-Europe contract prices, and vessels outbound from China in east-west trades were more than 95 per cent full, reports IHS Media.

Credited was greater capacity management from container lines in the fourth quarter and into 2017. This, it was felt, pushed up freight rates, tracked on Market Data Hub, leading to the optimistic outlook for the industry in 2017.

Mediterranean Shipping Co (MSC) chief executive Diego Aponte the container shipping industry was on the right track, and that the unprecedented consolidation during 2016 and the Hanjin collapse would generate more rational behaviour in carriers.

Mr Aponte said that even though there was a severe overcapacity problem, the industry was on track to fix it.

Maersk Line CEO Soren Skou said he believed the industry is at an “inflection point” and has even predicted his company will improve its profit by US$1 billion over the 2016 loss of $376 million.

Container line executives appear optimistic that 2017 will be a turn-around year for the industry.

Mr Skou said the supply and demand balance was improving with capacity cuts through scrapping and idling at an all time high.

This new found belief that the industry was finally on the road to recovery was also picked up by Alan Murphy, chief executive and partner at maritime analyst SeaIntel.

“In our ongoing contact with the shipping lines, we are starting to see something that has been woefully absent in the past eight years of endemic oversupply – optimism,” he said.

“It is hard to say if this optimism is simply rooted in the giddiness that comes from the planned rollout of major new networks and redesigned services, or if we are truly seeing the beginning of the return to more stable markets,” he said.

But Goldman Sachs in a recent report said: “While rates are now back at profitable levels, we believe significant slack capacity remains in the industry, capping meaningful further pricing upside during 2017.”

Alphaliner shared the sombre view, saying much depended on cutting global capacity if profitability is to be achieved on a significant scale.

Alphaliner also noted that the idle fleet reached a peak of 1.59 million TEU last October while fourth quarter demand only fell to 0.6 per cent against a much greater 2.2 per cent supply growth.

Source: Shipping Gazette

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