Surprise windfall for carriers in first half

Most of the shipping lines surprised the industry in the first half of this year by reporting huge earnings, with total operating profits of the 20 carriers reaching $3.78 billlion, according to a survey by Alphaliner, a shipping information platform Seventeen out of the 20 liner shipping companies featured in the Top 30 that publicly report their financial results have posted positive operating results for the first half of 2010. Several of these carriers, including Maersk, CMA CGM and Hapag-Lloyd, have recorded their highest interim results in history, providing further evidence that the liner recession is over after the industry's devastating performance in 2009. The collective operating profits of the 20 carriers surveyed by Alphaliner reached US$3.78 billion compared to a loss of $6.9 billion in the same period last year. The pace of the recovery in the liner markets in the first half of 2010 has taken all participants by surprise. Until the end of last year, these carriers had predicted that losses would continue at least until 2011. As it turned out, all the major carriers have reversed their losses during the first half, with only MISC, RCL and Zim still reporting operating losses. The carriers surveyed recorded an average operating profit margin of seven percent in the first half, compared to a negative margin of -17 percent in the same period last year. However, the operating margins varied widely, with European carriers outperforming their Asian counterparts due mainly to the strong Asia-Europe freight rates during the first half of the year. The highest and lowest operating margins were surprisingly posted by two carriers that are primarily focused on the intra-Asia trades, reflecting the different relative operating efficiencies even for carriers operating within the same trades. The highest margin was posted by Wan Hai, which recorded an operating margin of 13.6 percent on income growth of 46 percent as the Taiwanese carrier capitalised on strong Asian volumes during the first half of the year. Malaysian carrier MISC was the lone line which continued to record significant losses in the first half of the year, with a total operating loss of $122 million on a -34 percent margin, by far the worst operating margin among all carriers. MISC was also the only carrier that saw its liner revenues fall in the first half as the company scaled down its exposure to the liner trades following its departure from Asia-Europe in December last year. Total revenues of the carriers surveyed have increased by 39 percent on average, as the recovery in both volumes and freight rates boosted carriers' income during the first half. The highest revenue increases were posted by the Chinese carriers, CSCL and Coscon, which saw their total liner revenue recover by 79 percent and 78 percent respectively as these two carriers enjoyed the largest relative increases on the Asia-Europe and transpacific freight rates. Both Chinese carriers saw the highest rate reductions last year as they rely more heavily on spot cargo, the rates of which tend to be more volatile than those of contract cargo. Overall liftings for the carriers surveyed increased by 17.3 percent, which is in line with the growth in global container volumes recorded during the first half. The highest increase in volumes was recorded by Chilean line CSAV that saw total liftings rise by 55 percent in the six months of 2010 to 1.24 million TEUs from 802,400 TEUs in the same period last year. Among the main carriers, Hapag-Lloyd's modest volume increase of six percent was the lowest due to the German carrier's conservative approach during the period in terms of capacity expansion.
(Source:www.cargonewsasia.com)