Declining revenue per TEU puts pressure on liner profitability

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HONG KONG — The revenue container shipping lines are achieving per TEU has been falling steadily over the past three years as freight rates continue to weaken under the burden of excess capacity.

Revenue per TEU has fallen steadily since 2012.

According to data from DynaLiner, revenue per TEU in the past three years has declined for most carriers with the exception of Cosco Container Lines (Coscon). The container carrying unit of China’s largest shipping group recorded a low average revenue per 20-foot box as it is heavily involved in the low‐paying intra‐Asia trade.

However, since 2012, the top shipping lines are earning less per container at a time they can least afford it, and profitability is under pressure. Even Maersk Line, the world’s most profitable carrier, has seen its revenue per TEU sliding by $133 in three years, DynaLiner data showed.

The market research analysts looked at the earnings of the major carriers where even though greater container volumes were being carried, the lines were not earning as much per box and this was having a heavy impact on profitability.

Maersk Line saw the average revenue per box falling by 2 percent to $1,451 in the first three quarters of the year from Jan. through Sept., although like most of the world’s carriers, the real improvements have come in the third quarter peak season. Container volumes transported by the line during this period rose 5 percent to 14.1 million TEU.

Despite having lifted nearly 6 percent more full containers (4.35 million TEU) this year up to and including September, Hapag‐Lloyd’ saw revenue falling $261 per TEU since 2012, with the decline accelerating in the past year. That led to turnover falling by 8 percent from Jan. through Sept. year‐over‐year to $6.2 million, DynaLiner noted.

Revenue per TEU was worst on the Asia-Europe routes, but none of the trades covered by Hapag-Lloyd showed positive results in per-box earnings.

It was a similar picture for the top three Japanese carriers. Despite healthy growth in container volumes, the revenue per TEU was down.

“K” Line saw its liftings from Jan. through Sept. growing 6 percent, while the revenue it achieved per TEU fell 5 percent. The carrier’s revenue per TEU has fallen $136 since 2012.

The impact of low freight rates was illustrated in Orient Overseas Container Line’s third quarter figures where even with robust growth in volumes and revenue on the major east-west trades, revenue per TEU rose just 0.5 percent compared to the same period last year. OOCL’s revenue per TEU has slipped by $90 since 2012.

An imbalance between supply and demand, especially on the Asia-Europe trade, continues to place downward pressure on spot rates. According to the Shanghai Containerized Freight Index (SCFI), the spot rate has slid more than $500 per TEU since the general rate increases in early Sept. briefly lifted prices.

However, offsetting the decline in revenue per TEU is the falling oil price that will bring down operating costs for the carriers.

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