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 - LM Editorial

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

Newsroom Notes takes a look at some of the biggest stories and themes in logistics for 2014.

Even though China’s costs have risen and the U.S. has now surpassed Mexico as the preferred locale for relocating offshored manufacturing, advantages can be fleeting and the challenges great

Memphis-based FedEx reported solid fiscal second quarter earnings results today. Quarterly net income of $616 million was up 23 percent annually, and revenue, at $11.9 billion, was up 5 percent. Operating income at $1.01 billion was up 22 percent.

UPS said this week that it has added significant space to some of its North America-based distribution facilities, which the company increases the total size of its supply chain solutions network size by roughly 1.2 million square-feet. The company’s total global supply chain solutions network is comprised of 596 facilities and about 32.8 million square-feet. UPS offers various services at these facilities, including: warehousing and fulfillment inventory, transportation and returns management; custom kitting and packaging; and store-ready displays.

A week ago, the average price per gallon of diesel gasoline saw its steepest decline in more than two years, when it fell 7 cents to $3.535. This week took that decline a step further, with the Department of Energy’s Energy Information Administration (EIA) reporting that the average price this week fell 11.6 cents to $3.419 per gallon.

Article Topics

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

About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review. Patrick covers 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. Contact Patrick Burnson

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