Container carrier losses could reach $10b in 2016

With 13 of the top 20 container lines reporting combined losses of $2.5 billion in the first half alone, industry losses will likely range from $8 billion to $10 billion for the full year, according to Lars Jensen, CEO of SeaIntelligence Consulting.    More “dark clouds” are gathering for the top container carriers as mounting losses could total $10 billion in 2016, according to Lars Jensen, CEO of SeaIntelligence Consulting.
   Jensen noted in a recent analysis of carrier financials 13 of the top container lines by volume have already reported a combined $2.5 billion in net losses in the first half of the year. This figure should reach $4 billion by the time the remaining carriers release their first half financial results.
   China’s COSCO Shipping alone posted a net loss of over $1 billion for the first six months of 2016, while several other leading carriers have reported losses in the hundreds of millions.
   Ocean freight rates have plummeted over the last 18 months, dragged down by tepid global trade and rampant overcapacity that has resulted from the delivery and deployment of larger vessels on the major east-west trades.
   As a result, carrier financials have “markedly worsened” in the second quarter compared with first quarter 2016, said Jensen. If market conditions remain the same for the remainder of 2016, he predicts the industry could see combined losses in the range of $8 billion to $10 billion for the full year.
   The latest projection dwarfs the already gloomy $5 billion in expected losses put forth by London-based consultant Drewry at the beginning of the year and reiterated earlier this month.