Although spot freight rates have peaked in July, container carriers are still on track to record bumper 3rd quarter earnings with the July revenue figures more than 100% higher than a year ago. Carriers have managed to retain most of their recent rate gains into August despite the eroding market sentiment with EC freight futures for October trading at a 46% discount to current spot rates.
There is some positive rate developments, with Australia and Latin America rates enjoying a mini rally as capacity rationalisation on the Australia routes and increasingly serious port congestion in South American ports have kept space tight. However, rates to the US West Coast and Mediterranean have suffered heavy erosion in the past week due to excess capacity. The negative sentiment has started to trickle down to the charter markets, with charter rates starting to slip after an 8 month long rally although no major correction is expected due to limited availability of vessels.
Linerlytica
Carriers heading for bumper 3Q profits
Container carriers’ total revenue rose by more than 100% in July compared to a year ago, with the 3 main publicly listed Taiwanese carriers providing a glimpse of the bumper earnings that carriers are projected to earn in the 3rd quarter. Evergreen Marine, Yang Ming and Wan Hai’s July revenue figures increased by 132%, 122% and 144% respectively YoY, mirroring the average CCFI increase of 142% over the same period. Despite the recent spot freight rate correction with the SCFI dropping by 12.9% since the beginning of July, the CCFI has largely held its ground with carriers expected to retain most of their rate gains in August.
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