Peak season surcharges in 3Q12 bleak for NOL: Maybank Kim Eng

Will NOL’s 10% dip in spot price steer the shipping line to a peak season bonanza?

In a release, Maybank Kim Eng said that industry experts are closely watching the proposed implementation of a peak season surcharge on shipments, usually imposed in the third quarter of the year in anticipation of the Christmas shopping season.

Here’s more from Maybank Kim Eng:

Recommended surcharges range from USD300 per TEU on the Asia-Europe route to USD600 per FEU on the Asia-US route. However, a look at NOL’s 2011 quarterly average freight in Figure 1 shows that such peak season bonanzas are not guaranteed, especially in a stagnant or weakening demand environment.

NOL’s 2011 performance was severely affected by bunker prices that soared more than 30% YoY . Its net loss of USD254m in 1Q12 also came on the heels of a further surge in bunker cost. However, we think the almost 10% dip in spot price in 2Q12 could provide some relief.

Recent industry reports have drawn attention to conflicting signals in the global arena: a delay in surcharge implementation on the Asia-Europe route (with the exception of Maersk) in the absence of market support, but partial success for surcharges imposed on the Asia-US route. Our forecasts for 2012 freight rates are based on the assumption that freight rates will not veer significantly away from recovered 2Q12 levels.