LONDON: Despite the significant loss of box volume due to the pandemic, spot rates have soared above year-over-year levels through the second quarter, putting carriers on course for a US$9 billion profit this year if those rates can be maintained.

The ability of carriers to lose 15 to 20 per cent of container volumes while at the same time increasing rates has surprised a sector more used to witnessing rate wars in times of market distress.

Tight industry wide management of capacity has enabled carriers to not only prevent a rate slide, but to actually push rates higher, reports IHS Media.

That strength even in the face of sharply declining volumes has led Alan Murphy, CEO of Sea-Intelligence Maritime Consulting, to radically revise his carrier profitability model made in April, in which the worst-case scenario had carriers heading for a $23 billion loss in 2020.

The extent of April blank sailings, and their sustainability over the last few months, took everyone by surprise, noted Mr Murphy, and materially changed the analyst's outlook.

"If the carriers maintain the current rate levels, they stand to have a profit in excess of $9 billion in 2020," Mr Murphy said in a Sunday Spotlight statement. "If they start a freight rate war in the second half of 2020, they stand to lose $7 billion, but for now there is nothing indicating that we will see such a collapse - rather the opposite in fact. The severity of the negative scenario is so material that this is likely a key component in the carriers' newfound ability to be very disciplined in their capacity management. Once again, it is likely that it is the positive scenario which will unfold."

Neil Glynn, Managing Director and Head of European transport equity research at Credit Suisse said a lot of industry analysts would have expected the freight rate scenario in the second quarter to be considerably weaker.

"That has been very surprising, but it is also a good validation of the action taken from the management team across the sector," he said. "I think if you asked most people 12 months ago what the end result of a period such as this would produce, higher freight rates would have been at the end of that list.

“Clearly we need to continue to watch this very closely," Mr Glynn added. "But I do think that the culture of the industry leaders has actually changed, which is resonating in freight rate management. The second half may turn out to be worse than we expect, but I have certainly gained some confidence through the first half of this year."