KUALA LUMPUR: Higher fuel prices and the growing uncertainties of the past two months could cloud the sustainable recovery and growth that has been seen in the performance of transportation companies in the Asia-Pacific region, according to Standard & Poor's Rating Services.
It said this in an industry report card entitled " Asia-Pacific Transportation Companies: Stories Differ, But Fuel Prices And Economic Uncertainties Are Common Hurdles'.
In a statement Monday, Aug 15, S&P said some of the sectors that the global financial crisis affected the most, especially airlines and container shipping, recovered faster amid the economic growth of the past year.
Nonetheless, its aid higher oil prices had lowered companies' profitability, adding that average jet fuel prices had increased 46% year-on-year as of June 30, 2011.
One-off events such as the tsunami in Japan and floods in Queensland also affected profitability in the first half of 2011, it said.
However, S&P said the trend toward alliances continued with incumbent airlines and low cost carriers negotiating ventures, adding that this should increase the competition in short- and middle-haul routes.
S&P credit analyst Manuel Guerena said the business outlook for shipping companies in Asia-Pacific remained weak because of continuing transportation supply exceeding demand.
'In addition to high fuel prices and economic uncertainties, other factors, mainly overcapacity, will continue to hinder the recovery of the main shipping sectors in Asia-Pacific and globally.
"So, while we expect global shipping volumes to grow during the year, we believe overcapacity will result in strong pressure on prices and continuing volatility in freight rates at least until the second half of'' 2012,' said Guerena.
Nevertheless, Guerena said S&P believes that industry fundamentals will improve over time, along with a potential increase in demand from fast growing economies in the Asia-Pacific region, such as China, India, Vietnam, and Indonesia.
It said this in an industry report card entitled " Asia-Pacific Transportation Companies: Stories Differ, But Fuel Prices And Economic Uncertainties Are Common Hurdles'.
In a statement Monday, Aug 15, S&P said some of the sectors that the global financial crisis affected the most, especially airlines and container shipping, recovered faster amid the economic growth of the past year.
Nonetheless, its aid higher oil prices had lowered companies' profitability, adding that average jet fuel prices had increased 46% year-on-year as of June 30, 2011.
One-off events such as the tsunami in Japan and floods in Queensland also affected profitability in the first half of 2011, it said.
However, S&P said the trend toward alliances continued with incumbent airlines and low cost carriers negotiating ventures, adding that this should increase the competition in short- and middle-haul routes.
S&P credit analyst Manuel Guerena said the business outlook for shipping companies in Asia-Pacific remained weak because of continuing transportation supply exceeding demand.
'In addition to high fuel prices and economic uncertainties, other factors, mainly overcapacity, will continue to hinder the recovery of the main shipping sectors in Asia-Pacific and globally.
"So, while we expect global shipping volumes to grow during the year, we believe overcapacity will result in strong pressure on prices and continuing volatility in freight rates at least until the second half of'' 2012,' said Guerena.
Nevertheless, Guerena said S&P believes that industry fundamentals will improve over time, along with a potential increase in demand from fast growing economies in the Asia-Pacific region, such as China, India, Vietnam, and Indonesia.
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