As the losses pour in, it is hardly surprising to see container carriers preparing to hit shippers with hefty GRIs.
Hanjin Shipping just announced that it had swung from a US$250 million profit in 2010 to a $730 million loss last year. That’s a billion dollar difference in one year.
The Japanese carriers MOL, K Line and NYK are half a billion down in the last quarter and are predicting worse to come with their full-year results.
Maersk Line is in gloomy pre-reporting mode, as are most of the box carriers as they struggle to cope with too much capacity, slowing demand, weak rates and increasing operating expenses.
Small wonder, then, that the carriers on the Asia-North Europe and Mediterranean are trying to hit their customers with some eye-popping rate increases.
Hapag-Lloyd started it with the announcement that it planned to charge shippers an extra US$750 per TEU from March 1. Not to be outdone, Maersk Line said it would hike rates by $775 per TEU.
Then followed Coscon that wants an extra $300 a TEU from today and another $300 per 20ft box from March 1. OOCL wants to boost rates by a relatively modest $228 on February 8.
PR News Service reports that the increases are more than double any previous hikes, which is odd considering there is no business to speak of. Everyone is hurting, but surely the best time to slap customers with a record-breaking price increase is when business is booming, not when it is falling off a cliff.
Europe’s economy is still at DEFCON 1 and it is unlikely any spending power among its residents will be unleashed this year. That means there will be few orders coming in to the China factories, and few boxes of goodies being shipped to EU ports.
Of course, the container lines don’t have any expectation that shippers will agree to pay the increases. They are just raising the flag in a desperate attempt to get customers to salute.
The problem is that the carriers are losing so much money on the Asia-Europe trade that it hardly makes any sense to offer services any more. Profitability is poor at the moment, and more importantly, the prospect of future profitability, for this year at least, is equally dismal.
Whatever percentage of the asked for GRI they manage to squeeze out of shippers, there are not many full containers heading west at the moment.