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

The Department of Commerce reported that January retail sales were up 0.2 percent compared to December and up 3.7 percent annually at $449.9 billion, and the NRF reported that January retail sales, which exclude automobiles, gas stations, and restaurants, rose 0.6 percent over December and 1.4 percent compared to January 2015.

On the freight shipments side, Cass reported that January shipments––at 1.025––trailed December by 1.3 percent and January 2016 by 0.2 percent. These declines were less than the 4.9 percent drop from November to December, though, and January shipments still topped the 1.0 mark for the 65th straight month in December.

The Department of Transportation’s Bureau of Transportation Statistics (BTS) reported this week that its Freight Transportation Services Index (TSI) saw a 0.4 percent decline from November to December, its second straight decline on the heels of a 1.0 percent decrease from October to November.

Carloads saw a 11.7 percent annual decline at 241,680, and intermodal containers and trailers rose 10.5 percent to 262,830

An amendment to the International Maritime Organization’s Safety of Life at Sea convention will go into effect requiring all shippers (importers and exporters) to certify and submit the Verified Gross Mass – the combined weight of the cargo and the container – to the steamship line and terminal operator in advance of loading the container aboard a vessel.

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 2016 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA