28 March 2017

Inside the industry: efficiency is key for turnaround

The maritime industry continues to deal with the same challenges since the onset of the 2008 financial crisis. Sluggish demand levels are exacerbating supply-and-demand imbalances. However, the outlook for 2017 is fairly positive compared to 2016.

 

Looking at the Shanghai Containerised Freight Index (SCFI), the average freight rates on major East-West trades improved substantially during the course of the year, especially in the fourth quarter of 2016. The World Container Index (WCI) assessed by Drewry illustrates a similar development. An unusually early Chinese New Year helped carriers sustain those increased rate levels.

 

 

Source: Dynaliners

 

With a plus of 23.2% compared to the same period last year, the rate levels for the Asia - Mediterranean trade are increasing as well.

 

 

Although it is true that rates on the main trade lanes declined after Chinese New Year, industry analysts do not expect that they could slide back to the record lows of March and April 2015 in the near future.

Looking at the results for the last quarter of 2016, carriers continue to struggle to improve their financial performance. The experts are positive though that there is still a way to boost balance sheets, even in this difficult environment: Carriers should continue to aim to operate more efficiently, as consultancy Alix Partners emphasises in a recently published report. The industry has already cut CAPEX by more than half in the past five years, bringing it down from USD 25.2 billion in 2011 to USD 12.4 billion in 2016, Alix says. Even if a lot has been achieved already, there is still room for more. It remains vital to examine every detail of the business and look for better solutions. Sometimes it helps to change the perspective; sometimes new ways must be explored.

Either way, one thing is clear: efficiency is still key when it comes to operating in the maritime and logistics industry — so much we know about 2017. But if this year will be the turning point our industry desperately needs remains to be seen. 

 

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