Friday, November 28, 2014
Container shipping / NOL
Container shipping / NOL: HSBC believes that the US West Coast ports (52% of US container imports) have faced congestion due to factors such as container peak season , as well as longer term issues such as the shortage of chassis and contract disputes btwn port employers and labor unions, and believes a let up in congestion is likely to last until 1Q15. Port congestion is the foremost reason for shipping delays, with shipping lines skipping port calls, rerouting vessels and speeding up sailings, all of which entail additional costs. Liners have limited ability to pass on the costs in the short term. HSBC estimates the congestion could erode 2% EBIT margin in 4Q14 for lines , with Hanjin, Yang Ming and NOL most exposed to the transpacific route. Air cargo is the clear beneficiary, as the current air peak season looks like the best since 2010, with some demand switching from sea to air. Cathay Pacific is the most leveraged to the airfreight sector.