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June01, 2015

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6 THE JOURNAL OF COMMERCE JUNE 1.2015 SPOTLIGHT TOP 100 IMPORTERS AND EXPORTERS IMPROVED BALANCE SHEETS BELIE CARRIER WEAKNESS JUDGING BY FIRST-QUARTER earnings of major container lines, the industry is in tip- top shape. A closer look, however, reveals that much of their success is based on cheaper bunker fuel. Bunker prices, which fell by about 40 percent in the first quarter from a year earlier, helped offset a drop in container volumes accompanied by falling revenue per container. This has softened the blow of falling container volumes and freight rates as demand from the euro- zone and emerging economies remains weak, and the U.S. recovery wobbles along. Volumes carried by Maersk Line, which doubled its first-quarter profit, declined 1.6 percent year-over-year to 2.2 million 40-foot containers in the first quarter, and average freight rates fell 5.1 percent to $2,493 per FEU. APL's volumes plunged 15 percent from the first quarter of last year, with revenue per FEU falling 8 per- cent to an average of $2,063. CMA CGM was the exception, with volume jumping 10.5 percent. The French carrier didn't dis- close revenue per container. CARGO REBOUNDS, BUT PROFITS RETREAT AT ASIAN AIRLINES ASIA'S MAJOR AIRLINES operated at close to break-even in 2014, compared to net earn- ings of $2.2 billion the previous year, as fierce competition eroded profitability, according to data from the Association of Asia Pacific Airlines. But the bright spot was the recov- ery in international air cargo traffic, which rose 5.3 percent after several years of weak demand. Although air cargo markets weren't spared from persistent yield pressure, the upswing in demand helped lift cargo rev- enue to a combined total of $20.8 billion for the year, a 2.7 percent increase over 2013, said Andrew Herdman, the association's director general. "Asia-Pacific carriers faced a number of significant challenges in 2014, with capacity growth slightly outpac- ing market demand, leading to intensely competitive market conditions across all segments of the industry," he said. Combined operating expenses climbed 2.5 percent to $173.8 billion, driven by a 4.5 percent increase in non-fuel expenditures. Fuel SHIPPERS RETURNING TO WEST COAST? NOT YET. WITH DIVERSIONS CONTINUING in the aftermath of the debilitating congestion result- ing from West Coast labor negotiations that dragged on for nine months, the ports of Los Angeles and Long Beach turned in a mediocre performance in April, with total container volume edging up 1 percent from April 2014. This compares with much faster growth at East and Gulf Coast ports in April and through the first four months of the year. Savannah, for example, grew nearly 26 percent in April. When empty containers are factored out, the performance of the largest U.S. port complex was even less inspiring. Loaded import containers declined 3 percent from April 2014, and loaded export containers were down 12 percent, according to numbers released by the two ports. West Coast ports continue to experience cargo diversion to other North American ports. The diversions began last summer as cargo interests shifted to ports in Canada and on the U.S. East and Gulf coasts in anticipation of the July 1 expiration of the International Longshore and Warehouse Union contract. As a result of the cargo diversions and tremendous port congestion that resulted, other North American ports have been announcing double-digit gains in container volume. According to PIERS, a sister product of The Journal of Commerce within IHS Maritime & Trade, the West Coast market share of total U.S. containerized trade in the first four months of the year dropped to 49 percent from 54 percent compared to the same period in 2014. East Coast ports expanded their share from 40 percent to 44 percent in the same period. 0 3 6 9 12 15 April March Feb. Jan. Dec. Nov. Oct. Sept. Aug. July June May April March Feb. Jan. '10 5% 10% 15% 20% 25% 30% 35% Jan.'10 0 20 40 60 80 100 120 '10 '09 '08 '07 '06 '05 '04 '03 '02 '01 '00 ● WEST ● EAST ● GULF ■ A thing ■ B thing 20% 20% 20% 25% 30% 35% 2012 2013 2014 2015 Source: PIERS, a sister product of IHS Maritime & Trade US CONTAINERIZED IMPORTS: A COASTAL BREAKDOWN n Market share of imports moving through the U.S. East, West and Gulf Coasts, April 2015. costs declined marginally, by 1.1 percent to $60 billion, on the back of a 7.8 percent decline in global jet fuel prices to an average of $113 per barrel for the year. As a result, the share of fuel expenditure as a percent- age of total operating costs declined by 1.3 percentage points to 34.5 percent in 2014. The International Air Transport A ssociation put year-over-year global air cargo traffic growth at 4.5 percent in 2014, boosted by a rebound in trade that ended several years of stagnation. The increase, which was more than three times the 1.4 percent year-over-year growth recorded in 2013, was driven mainly by the Asia-Pacific and the Middle East, which accounted for 46 percent and 29 percent of the higher global volume.

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