The peak season enigma
Virtually every carrier has managed to get into the black by mid 2010, many of them spectacularly
After over a year of a constant stream of depressing financial reporting from shipping lines terminal operators and port authorities we are finally seeing positive numbers being announced in the financial results.
Virtually every carrier has managed to get into the black by Q2 2010, many of them spectacularly. Equally, terminal operators reported good results with ICTSI reporting a surge of 83% in net profits.
As recently as March no one wanted to believe that the trade recession was over but then a new philosophy took place. Rate restoration. This resulted in a rash of continuous rate increases and a slew of new surcharges. The industry wanted to get back to profit as quickly as possible and it succeeded.
As the economic recovery took hold it was clear that carriers were unprepared as we witnessed insufficient capacity and not enough containers where they were needed. Carriers began talking of introducing the peak season surcharge as early as June, but then it was delayed to mid July, then to August 1, followed by August 15 and now maybe in September. What happened?
Everyone was carried away with the year-on-year growth rates. Spectacular as they were, comparing growth with the weakest period of the recession, they hid an underlying weakness in Europe. The average monthly Far East westbound volumes were less than 1.1m teu, albeit 12% up on the average in 2009, it was still 4% below the average 2008 figures.
In North America in contrast, the growth was more solid, with strong growth in Q2, with an exceptional May to July. Yet in Europe, June (the latest data available) over May was down nearly 5%. In both 2008 and 2009 June had positive growth over May.
As a result of austerity packages and consumer doubts it appears that Europe may not experience a peak season this year, perhaps already recognised by the carriers not implementing the surcharges. In the US it may well have already come as predictions of a slowdown in the second half abound. Hopefully the recovery will not melt away as well.
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