18 June 2018, Global – Container shipping spot rates dropped meaningfully by 7% and 5% on the China-US West Coast and China-US East Coast trade lanes in the past week ending June 15.
Based on our estimates, Asia-US and US-Asia freight rates have fallen 7% and 17% y/y year-to-date. Meanwhile, US-Europe freight rates have risen 2% y/y year-to-date while Europe-US freight rates have remained steady.
Chart: China-North America container shipping spot market freight rates (2014 to 2018)
Trade wars to hurt carriers’ financial results in 2H2018
This, together with higher bunker fuel prices (+21% y/y ytd), will negatively impact container shipping companies’ financial results in 2H2018. See our previous reports for more details:
ZIM, ONE, OOIL, HMM, Evergreen Marine and COSCO SHIPPING the most affected
Globally, carriers with the largest capacity exposure to the Transpacific route region are ZIM, ONE (Ocean Network Express), which is formed by Japanese shipping lines Mitsui OSK (0.65x Price/Book valuation), Nippon Yusen Kaisha (0.69x P/B) and K-Line (0.95x P/B), Orient Overseas International (1.24x P/B), Hyundai Merchant Marine (2.30x P/B) and Evergreen Marine (0.94x P/B) respectively. ZIM and ONE also have the largest capacity exposure to the Transatlantic trade, in addition to MSC.
China’s flagship carrier COSCO SHIPPING Holdings (1.67x P/B) will also be affected. Note that OCEAN Alliance (made up of CMA CGM, COSCO SHIPPING, Evergreen Marine and OOIL) has the largest market share on the Transpacific trade at 40%.
Chart: Spot bunker fuel prices in US$ per ton (2016 to 2018)
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