GSL praises box line discipline

11/15/2012

Boxship owner Global Ship Lease has applauded container lines for exercising price discipline that has transformed their finances.

Carriers “have shown they can do it”, said GSL chief executive Ian Webber as he presented the company’s third-quarter results.

He said there was no reason why they could not do the same in 2013.

Webber noted that freight rate increases were successfully applied in 2012, despite delivery of more capacity, and that additional price rises were scheduled to take effect during the fourth quarter.

The behaviour of global carriers, which embarked on a rate war in 2011 that pushed them deep into the red, had greatly benefited their bottom lines, he said.

Webber would not comment specifically on CMA CGM, the line to which all 17 of GSL’s ships are chartered, other than to say that the French carrier had posted strong second-quarter figures and had forecast a profit for 2012.

But he said GSL was now “well-positioned to continue to provide value to our shareholders over the long term”.

The New York-listed company has long-term charter coverage and US$1.1 billion of contracted revenue, Webber said.

On the state of freight markets, Webber said the north-south and intra-regional trades were among those showing more robust growth.

Trades suffering most were the mainline routes and particularly Asia-Europe market, where volumes were contracting.

“On the face of it, both freight and short-term charter rates are driven by the same factors: demand for and supply of container shipping capacity,” said Webber.

But this year, lines finally tired of losing money had introduced price discipline, creating a disconnect between the two markets.

“Let’s hope there are more GRIs and that price discipline continues through 2013,” said Webber.