Margins to stay, says Fitch Ratings
According to the rating agency Fitch, container shipping spot rates have continuously risen in recent months, despite a significant reduction in demand for maritime transport due to the effects of the corona pandemic, but driven by shipping companies' supply discipline and further measures taken. Thus, financial results of these operators have been highly positive.
For Fitch, which forecasts a maintenance of these rates in the short term, the concentration of a growing market share in the hands of an increasingly small number of companies is the key factor that has allowed operators to control supply.
The three largest alliances - 2M, THE Alliance and the Ocean Alliance - operate around 80% of the global fleet of container ships. In addition, the levels of the order book have remained low during the current crisis, around 10% compared to the world fleet. In 2007 that figure was 60%.
According to the shipping company Hapag Lloyd, container ship operators reduced the available supply over Q2/2020 by more than 13%, to cope with the decrease of 11% in world demand. As a result, container shipping spot rates have risen steadily since June 2020, accelerating in August as demand improved and reaching record levels in October, despite its decline at the start of the pandemic.
Fitch reports that this strong growth has been due in large part to the policy of the Trans-Pacific liners which have benefited from an increase in volumes since last June. Moreover, the profitability of the sector in 2020 could be one of the highest to date, if the regular lines of container ships keep supply under control, since the order book is restricted. (cd)