BAROMETER. The shipping companies should be able to stay in profit in 2025, thanks to their performances in the first half. They are having to make savings, however, given the current level of rate levels on the major east-west corridors.
In the current post-holiday period, the shipping companies and non-vessel operating common carriers (NVOCCs) have taken up defensive positions. The contract market has enabled them to cushion a little the fall in ocean freight rates on the spot market but billing revenues have been eroded and fixed costs are continuing to increase. Most companies’ operating margins have fallen below 10%, something which has not happened since the pre-Covid era. Some less competitive lines are barely breaking even.
The financial equation is finely balanced, not to say unsolvable. For the shipping companies, the ideal would be to obtain a slight increase in freight rates and, at the same time, to return to the Suez Canal so as to bring about a substantial reduction in slot costs. However, a large-scale return to the Suez Canal, apart from the fact that it remains a highly uncertain prospect at present – as was demonstrated by the attack on the Dutch vessel, the Minervagracht) – would result in a further fall in freight rates.
This situation has led to some moroseness among vessel operators, who, apart from market factors, are having to deal with the imminent implementation of the new American tax on Chinese vessels and operators and the full impact of the additional customs duties on existing cargos, while, at the same time, continuing to decarbonise.
Main developments
- Demand at a low ebb
China’s Golden Week extended this year from 1 to 8 October. During it, factories are partly closed, which generally leads to a flood of orders in the weeks preceding it. This year, however, we have not seen this pre-Golden Week surge. Many importers placed their orders early, in the first half, to avoid as much as possible having to pay additional customs duties.
- The full effect of US tariffs
The additional customs duties imposed by the United States are now starting to come fully into force, even if last minute developments can never be excluded. In this unstable situation, the risk of under-declaration on the commercial bills used to calculate customs duties is high (...).
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