The 2016 third quarter peak season will not bring much respite to carriers as the period is not expected to see much of a volume uplift in the container shipping industry, a recent study conducted by shipping consultancy Drewry shows.
Nearly half of the 51 shippers who responded to the survey said that they expect volumes for the third-quarter peak season to be the same as they were last year, while another 35% anticipate lower volumes. Only 18% predicted higher volumes for container shipping’s busy period.
Drewry said that the results of the survey confirm that international trade remains sluggish.
“They will also be disappointing news to ocean carriers, who are in need of a pick-me-up in another difficult and unprofitable year, and to terminal operators, many of whom have underutilised capacity,” the shipping consultancy added.
Carriers have taken the unprecedented step of removing capacity in key trades ahead of the peak season in a bid to support freight rates, suggesting their short-term demand forecasts were telling them much the same story.
While the ratio does vary trade-by-trade, the third quarter has generally been the busiest period for the industry as retailers in the major consumer centres of the US and Europe stock up on goods. Between 2008 and 2015 the average proportion of annual world container volumes moved in the third quarter was 26.3%, ahead of 25.4% in the fourth quarter.
The third quarter is when carriers have been able to swell revenues through peak season (PSS), congestion and equipment repositioning surcharges, among others, but last year was pretty much a non-event in the high-volume westbound Asia to North Europe trade when the proportion of traffic only reached 25.8%, marginally better than the second quarter. The peak was more evident in the Transpacific headhaul routes but carriers will be wary of losing that predictability of volumes as it could reduce their ability to push through GRIs and PSS.
Drewry added that there “will be no demand push to bolster carrier sales in the peak season so we expect more supply-side manoeuvres to push through GRIs/PSS.”
Copyright 2018 Ships & Ports Ltd. Permission to use quotations from this article is granted subject to appropriate credit given to www.shipsandports.com.ng as the source.