2007 Container shipping forecast : A mix of good and bad
February 16, 2007 by SwizStick
Filed under Seafreight
According to this report from International Freighting Weekly:
Last year was a case in point.
Fears about the introduction of large amounts of new slot capacity following the huge ordering binge of 2003 and 2004 led to a collapse in rates from the third quarter of 2005.
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This softening in rates was particularly intense up until early March last year, with some ocean carriers posting declines of 50% or more on certain corridors of specific trade lanes.
The headhaul Far East/Europe trade was especially hard hit, with rates never fully recovering during the year.
“The industry shot itself in the foot, ” says one carrier executive, who requested anonymity. “There was this belief that supply and demand was going to be severely out of balance during the year.
Panic then set in and the main thinking for most carriers was down to protecting market share.
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On this basis, 2007 looks as if it will be more challenging, with global container trade growth forecast to be in the range of 8% to 10%, depending on which analyst report you read.
However, this is well below the anticipated growth in containership slot capacity, which is scheduled to rise by over 15% (1.4m teu) in 2007 and by 13.8% in 2008.
It should be noted that these figures are based on the technical capacity of the ships deployed and under construction and make no allowance for limitations such as deadweight, the carriage of oversize equipment, or draught restrictions in ports once they are deployed on individual trade lanes. The figures also make no allowance for possible scrappage of vessels, which is expected to pick up.
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The next two years are littered with uncertainty, with most analysts seeing global container trade rising by no more than 9% in each year. This compares unfavourably with the 10% posted in 2006 and 2005 and is well down on the 15% growth recorded in 2004.
While I believe demand and supply will be closer matched over the next couple of years, I still believe that demand will be greater than supply. The old consensus was that supply was going to easily out-strip demand and instead demand grew faster and higher than expected while some of the supply expected to come on board was delayed.
Also, as I have mentioned before, many analysts are not taking into account the impact some of these new ships will make on terminals and ports. From my understanding, a lot of this “excess capacity” that is coming into the system will be a result of the super-jumbo mega ships, which only certain ports can handle and which will surely tax port infrastructure wherever they call.
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