Hong Kong·based Orient Overseas Container, which last week announced a 15% fall in interim revenues would have gained little comfort from the fact it was not alone.

 The world’s largest container operator Maersk, saw revenues fall 20%, as did Hapag-Lloyd. Japan’s MOL revealed a 15% fall in revenues and compatriot shipping line K Line succumbed to a 21% decline. Across the sector revenues fell 18% on average.

 Analyst, Drewry Maritime Research, said that if the revenue contraction announced by the players mentioned was to hold true for the industry across the full year it would mean that carrier income could shrink by US$29bn against 2015 and below the level seen during the industry’s annus horribilis in 2009.

 “The difference between 2009 and now is that back then the industry’s cost base was far higher, leading to a collective operating loss in the region of US$19bn. Shipping lines are now more cost-effective, but even so the industry will probably lose at least US$5bn this year, according to proprietary forecasts from Drewry’s Container Forecaster.

 With all operators having introduced such severe cost cutting since 2009, it is difficult to know where some can turn in such a cash sapping market. Drewry’s report suggests that an obvious option is to look for M&A synergies but cautions that Hapag-Lloyd might anticipate US$400m per year from is merger with UASC · “but such savings are not guaranteed nor will they happen overnight.”

 The report concludes: “In the current declining revenue era for box carriers the pressure to find cost savings is mounting. Prolonged losses will increase the likelihood of more container M&A or more industry consolidation.”

 This depressing report comes barely a week after OOCL chairman C C Tung predicted a new normal where unexciting growth and a low interest environment became the new norm, at least for half a decade.

(Source : www.hongkongmaritimehub.com)