Page 58: of Maritime Reporter Magazine (June 2012)

Talk about ups and downs. In 2009, the container shippingindustry lost $16 billion. In2010, it made a profit of $20 billion, and last year was back in the red ink business with an $8 billion loss. This year? Break even is about the best prediction available even with a surge in freight rates as general rates increases(GRIs) imposed by the carriers in the first few months have largely stuck. By May, shipping lines on the Asia-Eu- rope trade saw rates surge to 2010 levels with solid spot increases being reportedon the transpacific. But the outlook for the rest of the year has industry observers worried. For market analyzing SeaIntel?s Lars Jensen, the problem is straightfor- ward: Too much capacity coming online too fast. ?There is nothing wrong with gettingthe big ships, but they are coming online faster than the market can absorb them,? Jensen said. ?For the next couple of years it is all going to come down to the carriers? ability to cascade capacity, and also to idle some capacity or accept thatthey cannot have the utilization they would like. If they can live with the lower utilization levels, rates will stay high, but I don?t know if they can live with it.? Ship utilization was very much on the mind of Maersk Line?s new head of south China, David Skov. He said shipping lines were realizing that the model of thebusiness was changing. ?In the old days, the most expensive cost was the ownership of your assets and carriers wanted to utilize them to the highest degree possible,? he said. ?But now with bunker fuel being so ex- pensive we are entering a time when the highest utilization may not be the modelthat gives a liner operator the best econ- omy. ?Lines will have to work out what makes sense. Look at the successful GRIs from March ? it makes sense for a ship to Containership Conundrum A rate war pulling prices down one year followed by soaring freight rates in defiance of a weak demand the next. Welcome to the container shipping business. By Greg Knowler, Hong Kong 58Maritime Reporter & Engineering News The 13,100 TEU Hanjin Sooho ties up at Eurogate Terminal in Hamburg during its maiden voyage. It is the largest vessel in the Hanjin fleet. MR June12 # 8 (57-64):MR Template 6/12/2012 9:07 AM Page 58