Sat, Jul 14, 2012 - Page 13 News List

Shippers raise rates, drive up profits

By Amy Su  /  Staff Reporter

The profitability of domestic container shippers may show a marked upturn in the third quarter from the second quarter, as peak season surcharges for routes between Asia and the US will be raised for the second time since last month, a brokerage house said in its latest report on Wednesday.

However, oversupply will remain a major obstacle for container shipping firms to maintain strong freight rates in Q4, the report said.

The Transpacific Stabilization Agreement (TSA) has announced an increase in freight rates for transpacific shipping lines next month, following last month’s hike of between US$500 to US$700 per forty-foot-equivalent unit (FEU) as firms seek more profits.

Capital Securities Corp (群益證券) said the second rise in freight rates may be between US$475 and US$675 per FEU, which further drives up local container shippers’ profits in the third quarter.

Evergreen Marine Corp (長榮海運), the nation’s largest container shipper in terms of fleet size, may be the largest beneficiary, as the routes between Asia and the US account for about 44 percent of company revenue, Capital Securities said.

However, the brokerage house said sentiment for the container shipping industry will stay volatile in Q4, as oversupply will still exist.

The major factor driving up profits in Q3 has been the careful control of capacity by major container shippers, instead of improved supply-and-demand conditions, it said.

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