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Pacific lines losses reach $15bn

Pacific lines losses reach $15bn
CONTAINER lines operating on the Pacific lost between $13bn and $15bn in 2009 as volumes and freight rates collapsed, Hanjin Shipping estimates.

Pacific lines 2009 losses reach $15bn.

CONTAINER lines operating on the Pacific lost between $13bn and $15bn in 2009 as volumes and freight rates collapsed, Hanjin Shipping estimates.

Internal calculations prepared by the Korean line show the full extent of the financial catastrophe from which the entire industry is still reeling.

Even if lines obtain the full rate increases that they are seeking in the forthcoming annual contract negotiations, it is unclear whether the trade will be back in profit, said Hanjin Shipping president Kim Young-min who has just taken over as chairman of the Transpacific Stabilization Agreement.

Addressing the Journal of Commerce"s 10th Trans-Pacific Maritime Conference, Mr Kim said the bottom line losses as revenue plunged by 29% to $17.2bn was accompanied by a collapse in asset values for transpacific carriers of almost a third to $11.6bn. That compounded lines" problems by making it even more difficult to access the financial markets.

Freight rates dropped by an average of $1,000 per feu in 2009 in what looks certain to go down as the worst year in the history of containerisation. Although rates are now recovering, with an emergency revenue programme that went well and the renegotiation of some annual contracts, Mr Kim said the trade overall was still ?far from breakeven?.

Cargo volumes have surged in recent weeks to the extent that vessel utilisation is now around 95% and shippers are complaining bitterly about a lack of space and cargo being left behind on the quayside.

But Mr Kim said that, despite the recent growth in demand, with eastbound transpacific volumes up 17% in January as stocks were replenished, idle vessels may not be brought out of lay-up while lines remain in the red.

He also noted that, even in the good years of 2003 and 2004, return on capital employed for the liner industry was only 7%, while in 2008 that was considered a good year, the return was negative. In 2009, the size of the negative return was ?out of range?.

www.turkishmaritime.com.tr

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