Subscribe to our free, weekly email newsletter!


Capacity glut continues to haunt ocean cargo arena

This is in line with a “steam off” during the second half of the year, said shipping analysts
By Patrick Burnson, Executive Editor
October 13, 2011

The Baltic and International Maritime Council (BIMCO) in Copenhagen forecasts inflow of new container tonnage in 2011 to be at 1.3 million twenty-foot equivalent units (TEU). This is in line with a “steam off” during the second half of the year, said chief shipping analyst, Peter Sand.

“As the young fleet holds a very limited demolition potential, it is forecast to grow by 8.7 percent in 2011 – equal to, and outweighing demand growth by close to 2 percent-points,” he told LM.

Sand explained that the amount of idle tonnage has finally picked up, but as demand for new vessels remains weak, tonnage will still have to be retired to restore balance in the industry.

“Should the further leaking of revenue be stopped in the current environment where slow-steaming is already the name of the game, extensive idling or lay-up of tonnage, perhaps even beyond 1 million TEU, may still not be unrealistic,” said Sand.

Bimco analysts added that closing down redundant services is a start, but not the full solution to the task at hand. Global container fleets have grown by 2 million TEU since the turn of the year 2009/2010, resulting in the “active fleet” growing by 3½ million TEU in 20 months (real growth rate of 30 percent).

“Liner carriers are seen to redeliver chartered-in tonnage at the earliest convenience and non-operating owner are likely to carry the lion’s share of the idle fleet,” said Sand.

By extrapolating the trend in inbound loaded container volume on the U.S. West Coast, bearing in mind the disappointing back-to-school season and non-existent peak season, the outlook is “unpleasant,” Bimco added.

Volume growth in the trans-Pacific could become negative. The outlook for the Far East – Europe trading lanes is still not as dire, with an accumulated growth rate of 7.2 percent for the first 8 months and a stable accumulated growth rate of 7-8 percent for the months February to August.

About the Author

image
Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

The Department of Transportation’s Bureau of Transportation Statistics (BTS) reported this week that U.S. trade with its North America Free Trade Agreement (NAFTA) partners Canada and Mexico increased 8.2 percent from September 2013 to September 2014 at $102.2 billion.

NS said that the D&H lines it plans to acquire connect with the NS network at Sunbury, Pa. and Binghamton, N.Y. and give NS single-line routes from Chicago and the southeast U.S. to Albany, N.Y., which is in close proximity to NS’ Mechanicville, N.Y.-based intermodal terminal.

This follows a 1.6 cent decrease last week, which was preceded by a 5.4 gain the week before and stands as the first increase going back to the week of June 23, when the weekly average headed up 3.7 cents to $3.919 per gallon.

BNSF said that its 2015 capital expenditures will be allocated towards various areas of its business, including maintenance and expansion of the railroad to meet the expected demand for freight rail service, with 2015 representing the third straight year BNSF has invested a record annual capital expenditures investment.

While the ongoing labor negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) ostensibly going from bad to worse, following the ILWU’s announcement late last week that it was halting negotiations from November 20 through November 30, a Congressional group last week penned a letter to PMA and ILWU leadership expressing concern over the state of the negotiations.

Article Topics

News · Ocean Freight · Global · Ocean Cargo · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA