Ocean Cargo: Moody’s downgrades container shipping forecast

Bulk and breakbulk carriers are also suffering the consequences of too much capacity
By Patrick Burnson, Executive Editor
July 12, 2011 - LM Editorial

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

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

AgTC will provide unique market intelligence at next annual meeting in San Francisco this June

With no fuel tax increase likely ahead of this year’s mid-term elections, trucking interests in Washington are moving to Plan B in their attempt to shore up funding for badly needed infrastructure improvements.

Crowley Maritime Corporation has acquired majority ownership of Accord Ship Management (HK) Limited and Accord Marine Management Pvt. Ltd.

To catch a rising economic tide this year, the Port of Long Beach will need to modernize and find new efficiencies to move increasing amounts of cargo at a faster pace, said experts gathered earlier this month for the Port’s 10th annual “Peak Season Forecast” at the Long Beach Convention Center.

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