Hanjin’s receivership represents the trough of the container shipping market, according to shipping consultants Drewry, and despite continuing concerns of weak trade growth and fleet oversupply a gradual market recovery is expected, according to the latest annual Container Forecaster and Review 2016/17 report published by the British company.
“Worse than expected second quarter financial results will be followed by a better second half-year,” Drewry maintained. But the analyst still expects container carriers to record a collective operating loss of $5bn this year.
“We forecast industry profitability to recover next year, thanks to improving freight rates and slightly higher cargo volumes, and so record a modest operating profit of $2.5 billion in 2017,” the company maintained.
Neil Dekker, Drewry’s director of container research, commented: “Hanjin’s failure is the culmination of several years of poor commercial decisions and mismanagement, not just by Hanjin, but the industry as a whole. But it did not necessarily signal a major tipping point for the industry. It was more a side-show as freight rates had crucially already turned a corner at the mid-year point. More consolidation is likely, but is not necessarily the route to the promised land. Senior company executives talk about synergy savings of hundreds of millions of dollars, but this means nothing when it is all too easily given away in weak contract negotiations and the desire to maintain precious market share. The answer lies with fully addressing the revenue side of the equation and thankfully there are signs that the spot market is being addressed to some degree. The acid test for 2017 will be how the lines approach BCO contract negotiations.”
