BMTI Container Market Review (28 May 2019)

container shipAgain taking a turn back toward the positive, rate trends ended up flatter than the week before, if only because the positive and negative movements were more uniformly distributed among various trade routes. On the whole, according to the Shanghai Containerized Freight Index, rates only declined by a minimal 0.3% on average even as some rates saw significant gains ex-Shanghai such as rates to PG, which rose 7.5% week-on-week to US$ 657/TEU while others saw considerable declines such as those to South America, which were down 9.5% on the week to US$ 803/TEU. These extreme points of departure notwithstanding, the market for con­tainership freights behaved rather timidly over the past week with no more than 3% up or down seen on the majority of freights, the aforementioned excepted. On the buoyant end (after PG redelivery) shipments to Europe saw nearly 3% improvement (up 2.8%) on the week to close at solid levels of US$ 743/TEU while Mediterranean redelivery enjoyed upgrades of 2.0% week-on-week to settle at US$ 710/TEU. On the negative side of things, rates to the USWC and USEC fell by 3.4% and 2.2% on the week to US$ 1,294/TEU and US$ 2,540/TEU, re­spectively, while rates from Shanghai to East-West Africa also declined by about 2.4% week-on-week to close within the range of US$ 2,554/TEU.

Citing a “high degree of uncertainty” in the market, according to CEO Constantin Baack, feeder shipping line MPC Container Ships recorded a loss in the first three months of the year. Founded in 2017, the company currently has a fleet of 69 feeder ships and has, in fact, seen increased revenue in Q1 compared to a year before, nonetheless adding up to a deficit in the same three-month period. MPC reported a pre-tax deficit of US$ 7.7m for the quarter, which was significantly negative compared to the US$ 0.51m profit the company reported in the same quarter of 2018—this despite having revenue growth of US$ 18.4m year-on-year to US$ 46.7m. The company blamed increased costs from upcoming sulphur re­strictions in 2020 and the ongoing US-China trade war for the diminished performance in early 2019.

Secondhand activity has remained rather muted in the containership sphere, but at least one sale was recorded over the past week, traders report, with the 1,100-TEU, 2006-built “BC Hamburg” ship (built by Jinling Shipyard) selling for just under US$ 5m to German-based buyers with a long term time charter contract to Mediterranean Shipping Company.

First quarter financial performance among the big­gest containership companies has been spotty, but Hapag-Lloyd has emerged as the best performer in the quarter, according to Seaintelligence analysis. Maersk, meanwhile, had the largest growth in oper­ating results for the quarter while Chinese liner Cos­co had the top growth in both revenue and volumes thanks in part to its acquisition of OOCL. Hamburg-based Hapag-Lloyd had the highest EBIT in the quarter among all liners while simultaneously boast­ing the highest revenue per TEU (EBIT/TEU) with the highest EBIT margin of 7%. Liner Wan Hai came in second place with an operating margin of 5.2%.

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