Carriers will struggle to achieve positive results in 2013

Although the results were significantly improved compared to 2011 when the same carriers recorded combined operating losses of US$5,970m, their failure to return to profitability bodes poorly for their prospects in 2013, with demand and supply conditions expected to remain negative. There is already evidence of weak carrier pricing discipline, as carriers failed to repeat their success in raising freight rates on the spot markets this year.

The recent rate increases implemented in mid-March on the key Far East-Europe trade have been eroded by poor vessel load factors and excessive competition with spot freight rates on the FE-North Europe trade currently 40% lower than at the same period last year.

With sluggish demand growth on main trade lanes coupled with a record level of new vessel deliveries this year, carriers are expected to continue to struggle to achieve positive results in 2013.