2013 International Logistics Update
We are partway through 2013, and the international logistics industry is facing some challenges due to international economic recessions. Below are details regarding ocean and air freight shipping.
Ocean carriers have seen some difficulty recently with rates having fallen by 41% since 2013 began. However, these falling rates are not stopping some carriers from increasing their capacity from Asia to East Coast South America. And carriers are also purchasing ultra-large container vessels and fuel efficient vessels to add to their fleets. All of this seems like it could result in significant overcapacity and even lower rates.
Considering that ocean carriers have lost about $7 billion in the last 4 years, something needs to change. According to analysts there are three main factors for carrier success in the ocean freight arena: having a fleet mostly containing fuel-efficient vessels, having a operational system that allows for low unit costs, and having access to more capital.
On the upside, bulk and breakbulk carriers are seeing increases in demand from East Asian countries – particularly for U.S. coal.
The air sector of the shipping industry shows strong numbers from the International Air Transport Association (IATA). They are estimating a $12.7 billion profit for the airline industry in 2013, which is a significant increase from the $7.6 billion profit in 2012. The air shipping industry is having its best year since 2001, but that still only results in a weak profit margin of 1.8%.
Efficiency has improved over the last few years in the air shipping sector, and oil prices are forecasted to be a little less than the average for 2012. Both of these are necessary for keeping airlines profitable this year considering the European recession was more severe than expected.
The other downside is that air freight volumes have remained relatively steady since 2010. 2013 is expected to see 52.1 million tons, and air freight volume in 2010 was 50.7 million tons. Hopefully these numbers will increase as developed countries regain footing after economic recessions.