Losses in the container shipping industry could reach US$5 billion in 2016 as fuel prices bottom out and freight rates continue to fall, according to Drewry Maritime Research.
The maritime analyst pointed out in its latest Container Forecaster report that further widening of the supply-demand imbalance , along with insufficient measures to reduce ship capacity, would lead to more freight rate reductions and sector-wide losses in 2016.
Global container shipping freight rates are anticipated to have dropped by as much as 9% last year with Drewry predicting that carrier unit revenues will decline further in 2016.
Comparisons are being made to 2009 when approximately 1.3 million TEUS (were) removed from a considerably smaller fleet," said Neil Dekker, Drewry director of container research.
"The industry is not there yet as some lines are still making a profit and the very low fuel prices are propping them up. But a further two or three quarters of declining financial profitability may trigger a notable rise in the idle fleet as we enter the second half of 2016."
