The 2016 operating margins for the top 13 ocean carriers have been announced. While the fourth quarter showed some improvement, the overall numbers were abysmal for the containership industry. Of the 13 carriers, only three posted operating margins in the black. Despite an uptick in rates triggered by the collapse of Hanjin Shipping, the remaining 10 carriers posted margins in the red. Several carriers posted operating results so poor that they were forced to rely on government financial support. Without this support, it’s almost certain that Hanjin Shipping would not have been the only carrier casualty.
Based upon how the most recent contract negotiations played out, it will be challenging for all 13 carriers to remain at or return to profitability. If the carriers can remain disciplined and refrain from reducing spot rates during non-peak shipping periods, there is an opportunity for the majority to return to operating margins in the black. However, without rate discipline, carriers will likely see another year of red ink and shippers will face another year of uncertainty and instability.
IHSA concluded 2017-18 contract negotiations in April and signed contracts with 11 ocean carriers. The new contracts provide confidential rates for containers shipped to and from the United States through April 30, 2018.
The International Housewares Shippers Association (IHSA) is a not-for-profit association formed to benefit companies belonging to the International Housewares Association (IHA). Through the combined leverage of members, IHSA negotiates freight contracts and partners with other logistics providers to lower supply chain costs.
IHSA’s main function is to negotiate the lowest possible transportation rates and provide the highest quality service for all participating members. Additionally, IHSA members receive valuable market intelligence and advice through regular newsletters and briefings.
IHA member companies looking to reduce their ocean freight costs or have questions about an ocean freight issue are encouraged to contact IHSA to learn about the program. Contact IHSA at +1-513-489-4743 and learn more on our website.
