Thursday, August 4, 2011

Japan's Fuel Rates Increase while Profit Declines

Two of Japans largest shipping lines have lowered their annual profit estimates due to falling rates and rising fuel costs. Fuel costs have climbed along with higher crude prices, while the rates for leasing out commodity ships have fallen 34 percent in a year. Container shipping is going to end up being the biggest struggle and dry- bulk shipping does not look like it is going to get any better either. Japan’s other shipping line has also lowered its operating estimates. These three shipping lines have greatly suffered in the demand for car shipping because of the earthquake that occurred in March. In April, vehicle transports dropped 68 percent, which is the biggest drop since 1973. Even though this drop hurt them in the first quarter, it will end up being their highest profit source for the rest of the year. This year, the three shipping lines have fallen more than 20 percent. As the Asia-U.S. and Asia- Europe routes expand and demands decrease, it has caused container shipping rates to fall. However, the global fleet of dry- bulk carriers will end up rising thirteen percent this year with an overtake of traffic by four percent.

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