The unexpected demand recovery in the container shipping sector driven primarily by the US-based demand surge has seen the charter market depleted of available capacity, reports Offshore Energy.
Increase in delays due to demand upturn
The demand upturn has lead to increasing delays and heavy port congestion impacting schedule reliability.
“Labor shortages and work interruptions in certain ports and various inland bottlenecks exacerbate the situation. As a consequence of this ships are waiting in line significantly longer than normal in Asian, North American and also in some other ports, leading to vessels being days and in many cases more than a week behind their normal schedule,” CEO of Hapag-Lloyd Rolf Habben Jensen said commenting on the market situation.
He added, “In past years we have always been able to react to congestion by adding recovery vessels to ensure that we continued to offer a weekly service, however as our fleets are fully deployed and stretched beyond capacity this is regretfully currently only possible to a limited extent.“
“Let me assure you: all our vessels are sailing, and if we can find additional capacity we will secure it, but the charter ship market is at the moment basically sold out,” he further said.
Slump in schedule reliability
Global schedule reliability dropped to 44.6% in December 2020, which means that for the fifth consecutive month, global schedule reliability has been the lowest in the past ten years, Sea-Intelligence said.
Compared to December 2019, schedule reliability is -31.7 percentage points lower, and is the fifth consecutive month that we have recorded a double-digit Y/Y decline.
“We also see a similar trend with the average delay for LATE vessel arrivals, which has recorded consecutive M/M increases for the past four months, reaching 5.74 days in December,” Alan Murphy, CEO, Sea-Intelligence, said.
Based on Sea-Intelligence’s report for December 2020, Hamburg Süd was the most reliable carrier with 55.3% schedule reliability. Only HMM and ZIM recorded a M/M improvement in schedule reliability, whereas none of the carriers recorded a Y/Y improvement in schedule reliability, with Maersk Line recording the smallest decline of a still-staggering -27.5 percentage points.
“This slump in schedule reliability coincided with the carriers’ introduction of capacity on the major trade lanes, above and beyond what we have seen before. With continued widespread port congestion, and with carriers still not letting off capacity-wise (especially on the major trades) not even for Chinese New Year, shippers might not see improving schedule reliability until 2021-Q2,” Murphy added.
No idling of vessels!
Jensen said that the company was implementing a comprehensive schedule recovery plan to get vessels back in their intended positions, stressing that there would be no idling of vessels. This will result in some services not having a sailing for one to two weeks.
“Hapag-Lloyd currently receives many more bookings than we have space available. The overwhelming amount of additional bookings causes in some cases delays in booking confirmations, cargo being rolled, and rejections,” he added.
Better operating results
On the basis of preliminary figures, Hapag-Lloyd significantly improved its operating results in 2020, securing earnings before interest, taxes, depreciation and amortisation (EBITDA) for the 2020 financial year increased to more than $3 billion.
Earnings before interest and taxes (EBIT) rose to around $1.5 billion. Both key figures are in line with the most recently published earnings forecast for the 2020 financial year.
The main drivers of these positive business developments have been improved freight rates and lower bunker prices as well as cost savings of roughly $500 million.
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Source: Offshore Energy
