Cost reductions top priority for box carriers

Drewry’s second quarter Container Forecaster highlights that there is a widening gap between the positive financials of the few carriers really focused on cutting costs and the rest of the top 20 lines, as they battle with the pressure of falling freight rates.

It forecasts that once again, average freight rates will be lower than in the previous year and estimates that on the head-haul transpacific trade alone, carriers have given away in the region of US$1.25bn in annual revenue via the lower annual contracts signed with Beneficial Cargo Owner clients in May.

They also signed new annual contracts on the Asia-Europe trade earlier in the year at levels of around US$150-US$200 per 40ft container lower than in 2013. On the positive side, they may have secured base cargoes to fill their ships at a low price; however, this puts more pressure on carriers to try and recover revenue from the spot market.  Drewry believes that volatility in the spot market will remain high this year.