Will capacity finally outstrip demand?
March 13, 2007 by SwizStick
Filed under Seafreight
News from Asia is that container lines plan to drastically increase capacity to Europe with larger vessels in 2007:
Hong Kong-listed China Shipping Container Lines (CSCL) is phasing in four new 9,600 TEU vessels on its Asia-Europe Express (AEX1) service under a programme that covers the February/July period, in a move that will boost capacity by a staggering 65 percent.
A year ago, CSCL operated this service with nine 5,600 TEU vessels – by mid-July 2007, the average size of the ships on this service will be around 9,000 TEUs.
Grand Alliance lines, including Orient Overseas Container Lines and NYK, are also adding capacity at an alarming rate, although not on such a dramatic scale as CSCL, by phasing in 9,000+ TEU vessels to replace ships of around 6,500 TEU on several services covering the same trade route.
We’ve heard this story before – that as ever larger ships continue to come online capacity will outstrip demand. It sure didn’t work in 2006 as many carriers posted losses or a reduction in revenue and profits. Throughout last year, fingers were pointed to 2007 as this is the year many of the new vessels are supposed to come online. It will be interesting to see if capacity truly does finally outstrip demand this year.
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