Shippers chart a rate increase

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Shippers chart a rate increase

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Shipping containers branded with AP Moeller-Maersk, Hyundai, Swift Transportation, Liski, VL-Logistic and Sinokor Merchant Marine logos stand in the freight depot at Moskva-Tovarnaya-Paveletskaya railway station in Moscow in this August 2012 file photo. [BLOOMBERG]

Struggling local shippers are poised to raise freight rates next month in a bid to boost their balance sheets as peak season for container lines gets under way.

According to Hanjin Shipping, the nation’s largest maritime shipper, the rate for 40-foot containers (FEU) from Asia to Europe will be increased by $1,000 starting Sunday. It will also raise freight rates to the U.S. West Coast by $400 and to the East Coast by $600.

No. 2 player Hyundai Merchant Marine also said it will raise rates to Northern Europe by $515 and to the United States by the same amount as Hanjin.

The recent moves comes after rate hikes by Denmark’s Maersk, the world’s largest shipper, and No. 2 MSC, a Switzerland-based shipper.

Rate increases will depend on negotiations with individual customers.

Hanjin reported an operating loss of 55.7 billion ($50 million) in the second quarter, compared to 79.5 billion won of operating profit in the same quarter, while sales declined 5.8 percent year-on-year to 2.66 trillion won. Net losses also widened to 80.4 billion won compared to a 1.2 billion won loss in the second quarter of 2012.

Hyundai Merchant Marine, meanwhile, reported an operating loss of 66.8 billion won from April through June, with revenue sinking 10.3 percent year-on-year to 1.83 trillion won. The company’s net profit returned to the black at 31.7 billion won, but that was mainly due to selling assets and benefiting from currency exchanges.

Analysts said that in addition of higher rates, companies also need to come up with sustainable measures to cope a long-term slump in the industry.

Despite the sluggish economy, Maersk Line reported $439 million in net profit, a 93.4 percent increase from $227 million a year ago. Experts said the world’s largest container ship operator benefited from cost-saving efforts such as bringing in fuel-efficient vessels. The company recently received two energy-efficient Triple-E ships from Daewoo Shipbuilding and Marine Engineering.

“The performance of Maersk shows that the way to make money in the shipping business is not only about freight, but managing costs,” said Park Moo-hyun, a researcher at E-Trade Securities. “The competition for fuel efficiency in shipping will intensify.”

Some shippers, meanwhile, have opened new routes to fully utilize their existing ships. Hyundai Merchant Marine said over the weekend that it launched a new container service to Indonesia with Sinokor Merchant Marine and Heung-A Shipping.

The company said that the new route, named Pusan Jakarta Express Service, can deliver products quicker and more securely than existing routes.

“We are reinforcing our service in Asia by opening a route to Vietnam in June, and now with Indonesia,” the company said in a statement. “Developing diverse routes in Asia will improve our competitiveness.”



BY JOO KYUNG-DON [kjoo@joongang.co.kr]

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