Fleet of new giants fuels fears of shipping overcapacity
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As the container shipping industry recuperates amid stormy economic times, concerns remain over looming overcapacity with more new vessels set to launch in the next two to three years.
CMA CGM group senior vice-president for Asia Europe lines Nicolas Sartini says that the two main markets in the liner industry – Asia-Europe and Trans-Pacific trade – have entered their peak season.
“Volumes are strong, resulting in rate restoration programmes successfully being implemented. This situation should prevail until end-October.
“With the start of the peak season, the overcapacity does not appear to be a big concern for the time being. As usual, carriers will have to deal with this when the slack season begins. Then, it would make sense to suspend seasonal services and idle vessels on several trades,” he said.
Maersk Line chief trade and marketing officer Vincent Clerc said supply as of today was not significantly out of sync with demand.
“However, the industry will phase in a 69 per cent increase in the fleet of vessels above 10,000 20-ft equivalent units (TEUs) over the next two to three years.
“This will not be matched with a corresponding increase in demand and thus, new deployment opportunities will have to be created for these vessels, or the vessels that will be made obsolete by their deployment,” he said.
He added that this would put pressure on infrastructure to build facilities that could accommodate bigger vessels, and on the lines to cooperate to create cargo flows that could support them.
“Smaller vessels will be made obsolete prematurely because their operating cost would simply not be competitive anymore,” he said.
On freight rates, Sartini said the dip, especially on the Asia-Europe trade, had reached unnecessarily low levels.
“No one benefits from the instability in freight rates which is prevailing – the carriers need to achieve decent returns to continue to invest on vessels and containers
“And the customers are looking for stable freight rates to get visibility on costs in their supply chain,” he said.
Nevertheless, the big boys – Maersk, CMA CGM – and another liner company, MSC Mediterranean Shipping Company SA, have recently agreed to establish a long-term operational alliance on East-West trade, called the P3 network, with the aim of improving and optimising operations and service offerings.
The P3 network will operate a capacity of 2.6 million TEUs, with an initial 255 vessels on 29 loops to be deployed in three main trade lanes – Asia-Europe, Trans-Pacific and Trans-Atlantic.
The network is expected to provide customers with more stable, frequent and flexible services.
