However, rates are still down substantially and below breakeven: Average revenue per FEU (in US$) fell 28% y/y to $2,219 in period 7, slightly better (+1ppt) than period 6 but still dismal. Freight rates are still at a low compared to the previous year’s levels, despite a concerted industry effort to raise rates. Although the market tends to react positively to every rate hike announcement and we believe the operating outlook is getting better, it is uncertain how much can be effectively passed through and when the liners can return to profitability as exporters and freight forwarders remain resistant. Moreover, once freight rates move up to more sustainable levels, the ships laying idle (which constitute c.10% of global container capacity) will be back online plus newbuild deliveries will also exacerbate the oversupply.
Top line recovering slowly: We estimate container revenues fell 36% y/y in period 7, a 3ppts improvement from the previous 3 months, where revenues fell 39% y/y. Year to date, container revenues fell 38% y/y.
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