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Supply
Chain by the Numbers |
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- May 15, 2015 -
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Walmart Primes for Amazon Battle; Is Chinese Economy Heading South Fast? Maersk Lines Cannot Help itself with New Ship Order; Truckload Carriers Blow it Out in Q1 |
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$50 |
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6
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That's how many new 20,000 TEU megaships container shipping giant Maersk is ordering from South Korea's Daewoo Shipbuilding, with options for four more, according to reports this week. The 10 ships together would cost some $1.5 billion, with the first deliveries arriving in 2017, for use in Asia to Europe routes as part of Maersk’s "2M" shipping alliance with Mediterranean Shipping Co. This news comes after the last of the 20 18,000-TEU Triple E ships that Maersk ordered from Daewoo in 2011 will be delivered in July. Those ships of course at the time were the largest on the seas, but lately have been surpassed. Just a couple of months ago, Maersk's Line’s CEO said that 18,000-TEU ships were really in the "sweet spot" for container shipping, and that much larger ships would not be practical. The capacity madness in ocean shipping continues on.
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56.9% |
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That was the growth rate in net income in Q1 across the seven public truckload carriers we follow, as the sector enjoyed a blow out quarter powered by strong demand and higher rates. JB Hunt, for example, said it was able to achieve core pricing gains of some 9% in Q1 - "ouch" if you are a shipper. The Cass Linehaul index, which measures per mile rates, was up 7.9%, 6.6%, and 5.1% year over year in January, February and March, respectively. Naturally enough, average operating ratios, or operating expense divided by operating revenue (a key transport sector metric), declined substantially in the quarter to 88.3% from 91.7% in 2014. There are some signs TL carriers are starting add to capacity at long last, though lack of drivers constrains their ability to do so.
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That's the "unmassaged" rate of real GDP growth in China in Q4 - far below the official number of rate of 7.4%. That according to Diana Choyleva of Lombard Street Research in a research note this week. Choyleva says the Chinese economy is decelerating rapidly, far below official figures, and is a very worrisome development for the global economy. Lack of demand by China is of course perhaps the key factor in the 2014 collapse of energy and commodity prices worldwide, and those prices could fall even further if China demand contracts still more. A significant slowdown in the overall Chinese economy could imperil the nascent recovery being seen now in the US and much of Europe.
