The rush to bring forward US imports ahead of the imminent Trump tariffs and potential strike on the US East Coast has so far failed to raise Transpacific freight rates. Rates to the West Coast slipped by 12% last week, even with more than a dozen ships stuck outside Canadian ports as carriers continued to slash rates as capacity utilisation has dropped to their lowest level this year. Although cargo demand remains strong with the most recent volume index to the West Coat remaining 15% higher than last year, the problem lies with the carriers inability to manage the capacity influx with average West Coast capacity growing by 17% year over year.
The recent rate weakness has not curtailed carriers’ appetite for ships as charter rates and 2nd hand vessel prices continuing to rise. MSC has been particularly active in recent weeks as it continues to widen its lead in the market.
Linerlytica
Gemini partners’ profit margins lagging behind their peers
Container carriers’ earnings in the 3rd quarter of 2024 have surged with average EBIT margins of the 9 largest publicly listed liner companies rising to 33% from 16% in the previous quarter. However, a clear gap has emerged between the top and bottom performers with Hapag-Lloyd and Maersk lagging far behind their peers. The 2 partner carriers in the new Gemini Cooperation achieved an average EBIT margin of just 23% in the 3rd quarter, less than half of EMC’s 50.5% margin, with their over-reliance on an Europe-centric network, long term customer contracts, high operating cost base and lack of tonnage growth pulling down their performance relative to their rivals who have been able to capitalize on surging freight rates in the quarter.
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