Monday, July 29, 2013

Overcapacity remains a concern in shipping

29 Jul 13 - 17:39

Overcapacity remains a concern in shipping

As the container shipping industry recuperates from a challenging market environment, concerns still abound over the looming overcapacity as more new vessels are expected to come on stream in the next two to three years.
CMA CGM group senior vice-president for Asia Europe lines Nicolas Sartinitold StarBiz that the two main markets in the liner industry - Asia-Europe and Trans-Pacific trade - have entered their peak season.
"Volumes are strong, resulting in rate restoration programmes successfully being implemented. This situation should prevail until end-October.
"With the start of the peak season, the overcapacity does not appear to be a big concern for the time being. As usual, carriers would have to deal with this when the slack season begins. Then, it would make sense to suspend seasonal services and idle vessels on several trades," he said.
Maersk Line chief trade and marketing officer Vincent Clercsaid supply as of today was not significantly out of sync with demand.
"However, the industry would phase in a 69% increase in the fleet of vessels above 10,000 20-ft equivalent units (TEUs) over the next two to three years.
"This would not be matched with a corresponding increase in demand and thus, new deployment opportunities would have to be created for these vessels, or the vessels that would be made obsolete by their deployment," he said.
He added that this would put pressure on infrastructure to build facilities that could accommodate bigger vessels, and on the lines to co-operate to create cargo flows that could support them.
"Smaller vessels would be made obsolete prematurely because their operating cost would simply not be competitive anymore," he said.
On freight rates, Sartini said the rates, especially on the Asia-Europe trade, had dipped to unnecessary low levels.


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