London—Aggressive additions to ocean liner capacity and a slower North American economy have combined to produce excess container capacity, according to some maritime industry analysts. "Quite frankly, we are all a bit worried," said Dan Clague, director of transportation and infrastructure at SG Hambro Bank, at the Fourth Annual Containerization International Conference in London in March. "There's been far too much ordering of vessels over the past couple of years and as a consequence, far too much capacity in every major trade lane."

As a result, Clague said, the long-term forecast favors shippers. In fact, he expects rates to soften soon, leaving carriers' customers in "the driver's seat." "More capacity means more shipper leverage," he declared.

Clague said the first indication of the downward shift was the steady decline of charter rates last year. "A fall-off in revenue comes next," he said, "and even cheaper bunker fuel costs will do little to mitigate the loss of profit." Joining operating alliances won't help carriers cut costs much, either, he noted, adding that perhaps only consolidation would have the necessary impact.

London-based Drewry Shipping Consultants recently issued a report that mirrored Clague's observations. Growth on the three main liner routes—the trans-Pacific, the trans-Atlantic, and the Europe-Asia routes—will slow from 10 percent in 2000 to 8.5 percent this year, the analysts said. Meanwhile, the world container fleet will expand by 12.5 percent, outpacing the growth in demand. "This will trim freight rates 3 to 5 percent," the report concluded, "eroding profits for carriers that are operating on average margins of 3 to 6 percent."