Box lines face combined loss of $32bn

http://www.lloydslist.com/ll/news/viewArticle.htm?articleId=20017623897
CONTAINER lines face a combined loss this year of $32bn if conditions remain as they are.
That is the latest projection from Drewry Shipping Consultants in a fast-moving marketplace where forecasts are having to be adjusted almost daily.
Carriers will not be able to make anything like enough cost savings to offset a massive slump in revenue as cargo volumes and freight rates collapse, according to Drewry’s liner shipping director Mark Page.
The firm estimates that container operators’ income could be down by between $65bn and $68bn this year, on a very basic calculation, wiping out the industry’s 2008 operating profit of $8bn when revenie totalled around $220bn. Potential for budget cuts is far less than the possible revenue drop, leaving a gap between the two adjusted figures of some $40bn.
The collapse in freight rates has been sudden and brutal, with eastbound transpacific rates dropping by more than a quarter in the first eight weeks of the year.
The speed of the market collapse has “overwhelmed the carrier community,” he continued, with those lines that have yet to respond likely to “regret not taking radical action sooner.”