Ocean Cargo: Moody’s downgrades container shipping forecast

Bulk and breakbulk carriers are also suffering the consequences of too much capacity

By ·

The container shipping industry is not the only segment of ocean carriage under severe pressure, said Moody’s Investors Service. Bulk and breakbulk carriers are also suffering the consequences of too much capacity.

According to reports on yesterday’s teleconference, it will be at least a year before demand catches up with supply in nearly all niche categories of vessel operations.

“The current dry-bulk order book is equal to approximately 46 percent of the tonnage on the water, and around 80 percent of these vessels are due for delivery over the next two years, creating a supply-demand imbalance that will continue to depress freight rates,” said Moody’s Corporate Finance Group vice president / senior credit officer Marco Vetulli.

On the container side, Moodys stated that the downside risks associated with oversupply have recently heightened on the back of a surge in orders for new vessels, “which is a significant contributor to the negative outlook.”

This mirrors recent reports in LM which noted that a mass movement toward fleet building in recent years has softened the revenue model.

“The deilemma is that each carrier is aware that its top priority is to be cost-competitive, even if the collective impact of individual orders for lower unit-cost vessels is weakening the market,” said Neil Dekker, editor of the Drewry’s Container Forecaster.
 
Moody’s expectations for the second half of 2011 remain neutral, however. Its report added that Japanese shipping conglomerates were feeling less of an impact because of their scale, diversification and strong relationships with customers act as mitigating factors.

For related articles click here.


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!

Latest Whitepaper
Making the Case for FedEx Critical Inventory Logistics
FedEx Critical Inventory Logistics is designed to help companies streamline and drive costs out of their aftermarket service supply chains to meet customer service level agreements and grow their bottom-line revenues.
Download Today!
From the December 2017 Logistics Management Magazine Issue
Trade and transport analysts see rates rising across all modes in accordance with continued expansion of domestic and international markets. Economists, meanwhile, say shippers can expect revenue growth in transport verticals to remain in the 3%-plus range.
2018 Customs & Regulations Update:10 observations on the “digital trade transformation”
Moore on Pricing: Freight settlement and your TMS
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
2018 Rate Forecast
Join our panel of top oil and transportation analysts for an exclusive look at where rates are headed and the issues driving those rate increases over the coming year.
Register Today!
EDITORS' PICKS
Building the NextGen Supply Chain: Keeping pace with the digital economy
Peerless Media’s 2017 Virtual Summit shows how creating a data-rich ecosystem can eliminate...
2017 NASSTRAC Shipper of the Year: Mallinckrodt; Mastering and managing complexity
An inside look at how a large pharmaceutical firm transformed its vendor and supplier relationships...

2017 Alliance Awards: Recognizing outstanding supply chain partnerships
In an era where effective supply chain collaboration is both highly valued and elusive, Logistics...
26th Annual Study of Logistics and Transportation Trends: Transportation at Digital Speed
While a majority of companies strongly agree that transportation is a strategically important...