Seven out of 30 is a pretty disturbing number.
That's an eye-catching low of 23%, hardly a respectable number for any industry. But in 2012 only seven of the 30 largest shipping firms made money.
Since 2007 excess capacity has been the industry's worse nightmare. The global downturn added to the problem. It's one of the oldest economic dilemmas, too much capacity and too little demand.
Europe and Asia, key shipping routes, slowed and high fuel costs didn't help. And it's tough to raise rates in such an environment. Over capacity and decreased demand, according to industry sources, caused freight rates to take a hit, falling by nearly 7%.
According to a WSJ article, the cost of a 20 foot container going from China to Europe that cost $1200 at the first of this year now runs about $800.
The high fuel costs led to building more fuel efficient freighters, adding to an already over supply of vessels some estimate that is at least 10% above current needs. There is also fears about another price war like the one in 2011 breaking out.
In our Thursday Reads we posted a link: Shipping Next. It's worth a look. The whole industry passes the sniffing around rule.
http://www.cnbc.com/id/100697092
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