Asia/Pacific News
Shippers Living "Hand to Mouth" Despite Low Bunker Prices, Near 100% Utilisation
Indian bulk shippers are living "hand to mouth" despite almost full utilisation and low bunker prices, Indian media reports.
Bunker prices currently sit at around 50 percent of their price nine months ago and Indian shippers such as Shipping Corporation of India, Mercator, and Essar Shipping are seeing close to 100 percent vessel utilisation.
However, a senior official with Essar Shipping said dry bulk rates have fallen further than bunker prices, "so the input cost coming down will not help."
A senior official at Shipping Corporation of India said separately "the freight rates in the bulk segment are so low that despite deploying nearly 95% of the bulk fleet and bunker prices falling, we have no margins in this segment and are absolutely in a hand-to-mouth situation at present."
The tanker sector is faring slightly better, according to the report, though rates are said to be down from peaks at the start of the year.
Mercator said it is missing out on the upside in the tanker sector as it locked in two-year contracts before the upturn in rates.
Container lines have, in contrast, reported strong results for 2014 and presented an optimistic outlook for 2015.
Earlier this year Maersk Line reported a 50 percent year-on-year jump in profits for 2014.
On Monday, CMA CGM Group Vice President Rodolphe Saade said the "performance in 2014 was extremely robust."
Earlier this month, consultants Alix Partners said that continuing investment in new, larger vessels is vital for the future of container lines, however, lower bunker prices are unlikely to boost financial positions sufficiently and financial improvements seen in recent years are not sustainable.
