The London-based shipping research and consulting firm said carriers can’t cut costs fast enough in an industry where revenues may be $50 billion below what they were in 2014.
The revenues of container carriers are falling faster than they can cut costs, while the industry may have collective losses of $5 billion this year, according to the London-based shipping research and consulting firm Drewry.
“First-half results so far suggest sales are down by around 18 percent, increasing the pressure to reduce costs,” Drewry said in its latest Container Insight Weekly newsletter.
Drewry added that if the trend holds for the rest of the year, carrier income will shrink by about $29 million against 2015. “That would see industry revenue fall below the level seen during the industry’s nadir of 2009,” Drewry said.
A survey of shippers found 47 percent of the 51 companies that responded expect volumes in the third quarter of this year to be the same as in 2015, while 36 percent anticipate lower volumes during what is normally the container shipping industry’s “peak season,” Drewry said.
In 2009, the industry had a collective operating loss of around $19 billion. However, Drewry said shipping lines have lowered costs, so the loss this year will likely only total $5 billion, even though revenue this year will probably be $50 billion below what it was in 2014. In 2009, sales fell a whopping $66 billion in a single year.
“In the current declining revenue era for box carriers the pressure to find cost savings is mounting,” Drewry said. “Prolonged losses will increase the likelihood of more container M&A or more industry consolidation among carriers.”
Drewry: Container industry may lose $5b in 2016
