Container and dry-bulk shipping sectors in the Asia-Pacific are still facing uncertain times.
Slower demand from Europe and a stream of newbuildings that was anticipated to enter the market this year were factors impinging on the container shipping sector, said investment banking group Nomura International (HK) Ltd in a report recently.
Meanwhile, the dry-bulk sector continued to suffer from oversupply of vessels, and was currently hampered by low freight rates due to the recent floods in Australia, it said.
Nomura remains cautious on the container shipping sector as demand growth in Europe is set to be slower than that in the United States.
The key earnings driver would be the Asia-to-Europe routes, which experienced higher margins and profitability last year.
“Supply of vessels is likely to be focused on those exceeding 10,000-TEUs (twenty-foot equivalent units).
“The order book is skewed towards this segment, which accounts for 45%. The supply of vessels of this size is set to grow by 98% this year,” it said.
However, Nomura said port and route limitations were preventing these large vessels from operating on many Asia-to-US routes.
“Carriers also face cost pressures from higher bunker oil prices and terminal-handling charges, primarily from Chinese ports,” it said.
Nomura estimates that Asia-to-Europe freight rates would drop by 4% this year while trans-Pacific freight rates would increase 1% despite the fact that annual contracts, for which negotiation usually ends in May, are likely to be concluded marginally lower this year.
“The main reason for these diverging freight rates is the way the routes are structured, mainly on a quarterly basis for the Asia-to-Europe routes and annually for the trans-Pacific routes.
“We also estimate that Asia-to-Europe routes would have higher spot contracts and a greater percentage of freight forwarders on the European routes than end-users on the US routes,” it said.
For dry-bulk shipping, Nomura said oversupply, slower demand and inflation concerns continued to plague the outlook for sector.
“While we believe these are valid concerns, we estimate that current freight rates are at artificially low levels due to bad weather and flooding problems in Australia,” it said.
With iron ore and coal each accounting for 30% and 27% of total volumes, Australia is a key export region of the raw materials, given that the continent is the largest exporter of iron-ore and second-largest of thermal coal globally.
“Once the Australian flooding problem eases, we expect a rebound in freight rates, although this will still be lower than historical highs, given the problem with the supply of vessels,” it added.
Nomura said supply growth remained a concern for the sector. Despite record newbuilding deliveries last year, orderbook as a percentage of current fleet remains at 52%.
“We estimate net supply growth of 11.3% in 2011 and 2012 respectively, after factoring in a 42% newbuilding delivery slippages in both years.
“This is higher than in 2010 with newbuilding slippage of 36% due to lower freight rates this year and 2012,” it said, adding that scrapping was the wild card, given that 31% of the existing fleet was over 20 years old.
Newbuilding delivery slippages refers to new vessels that do not enter the market.
Nevertheless, Nomura remained relatively optimistic that demand for iron ore and coal (thermal and coking) would remain strong.
Source: BizStar
No comments:
Post a Comment