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 ·

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

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 [email protected]

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!

Article Topics

Global · Ocean Cargo · Ocean Freight · All Topics
Latest Whitepaper
The Benefits of Shared Transportation & Supply Chain Networks
In this new digital issue, the editors of Logistics Management have gathered four feature articles designed to help mangers break away from traditional, “transactional” relationships and move toward integrated provider partnerships for freight transportation.
Download Today!
From the August 2016 Issue
A growing number of low-cost lift trucks offer new avenues for pairing equipment and applications, but less cautious buyers might find that small up-front costs come at a steep price. Selecting the proper lift truck, lift truck tips 2016, Choosing the right Lift Truck
Megatrends in ocean freight
Ocean Cargo Roundtable: What’s in store for 2017?
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Getting the most out of your 3PL relationship
Join Evan Armstrong, president of Armstrong & Associates, as he explains how creating a balanced portfolio of "Top 50" global and domestic partners can maximize efficiency and mitigate risk.
Register Today!
EDITORS' PICKS
2016 Quest for Quality: Winners Take the Spotlight
Which carriers, third-party logistics providers and U.S. ports have crossed the service-excellence...
Regional ports concentrate on growth and connectivity
With the Panama Canal expansion complete, ocean cargo gateways in the Caribbean are investing to...

Digital Reality Check
Just how close are we to the ideal digital supply network? Not as close as we might like to think....
Top 25 ports: West Coast continues to dominate
The Panama Canal expansion is set for late June and may soon be attracting more inbound vessel calls...