Drewry: 2013 carrier profits rest on cost cutting, price discipline

   Drewry is forecasting that companies in the container shipping industry will have a collective operating profit (earnings before interest and taxes, or EBIT) of $6.2 billion in 2013, compared to $280 million in 2012.
   Referencing its Container Forecaster report, Drewry said “carriers themselves are the biggest risk to this forecast. While there are significant profit gains to be had through cost-cutting, if lines were to lose their pricing discipline and enter into a new rate war heavy losses will undoubtedly follow.”
   The industry profit in 2012 was “a very poor return for moving nearly 170 million TEU of loaded containers, although any sort of profit seemed highly unlikely after the heavy losses sustained in the first quarter of 2012,” says London-based Drewry.
   2012 was “a significant improvement on the estimated $7.7 billion loss endured in 2011,” but Drewry added that “the revival in fortunes that saw all carriers back in the black for the third quarter has quickly dissipated and many lines lost money again in the fourth quarter.”
   Drewry said “only three major carriers (CMA CGM, Maersk Line and OOCL) returned a meaningful operating profit for the full year, although Hapag-Lloyd did salvage a tiny profit of $3 million. Ultimately, these select few ‘winners’ neutralized the losses accrued by the rest so that our industry average balanced out at close to zero.”