Jul.2--DESPITE an increase in sea freight volumes, European forwarders will feel the squeeze of rising container rates and cost creep, says the Hongkong and Shanghai Banking Corporation's (HSBC) latest report, Empty Vessel.

Major forwarders, like Switzerland's Kuehne + Nagel, have been unable to translate strong volumes in 2011 of 3.3 million TEU, up 11 per cent year on year, into higher returns which it says is "disappointing", said the Global Research report.

Said HSBC analysts: "We expect sea freight gross margins to come under increased pressure in the second quarter as a result of the rapid rise in sea freight rates, particularly on the Asia-Europe trade lane, which remain lacklustre."

The debt crisis in Europe means a pick-up is unlikely and though rates have stabilised with peak season surcharges on hold, the market waits with "bated breath", said HSBC. "If rates hold at current levels, most carriers will break even for the year, but further slippage will precipitate another year of losses," the report said.

(Source:shippingazette)