Box recovery will come via cost cutting and global alliances: Drewry

GLOBAL shipping alliances and cost cutting is the way to recovery in container shipping sector which is expected in two years, says Drewry’s Container Annual Review and Forecast 2014-2015.

This is about survival and the long-term management and sharing of costs,” said Drewry container research chief Neil Dekker.

Drewry Maritime Research’s report said more than 98 ships of 10,000 TEU or more, as well as 100 ships between 8,000 to 10,000 TEU, will be delivered within two years.

This excess capacity will drive down freight by three to four per cent next year, said Drewry. But cost cutting will save the day, yielding results for carriers and shareholders alike.

Drewry also noted that revenue was increasing due to more rapid growth, Moreover, costs were falling faster than rates. Another key factor will be the cost cutting impact of new alliances forming in the next few months.

Mr Dekker said matching supply and demand, especially on north-south trades is probably not possible, Lloyd’s List reported. “The strategy is to drive down unit costs, but this will not necessarily result in considerably better utilisation, since all lines are upgrading, nor in freight rates.

“The question we should be asking is not about when a recovery will happen, but what form will it take. Recovery will not simply be a matter of matching supply and demand,” he said.