SAINT SIMONS ISLAND, GEORGIA (February 7, 2017) – Even though shipping lines’ rates have rebounded – in some cases significantly – since 2016, the industry still faces tough times ahead, an analyst told attendees of the Georgia Foreign Trade Conference.
The challenges are, at least in part, due to the increasing number of 18,000+ TEU vessels due to come online in 2017 and 2018, said Hua Joo Tan, the Singapore-based executive consultant at Alphaliner.
“It’s a scary amount” of capacity, he told attendees of the conference sponsored by the Georgia Ports Authority. “These are the critical years that the carriers will have to navigate before we can see any sustained recovery for the container shipping lines.”
Continuing overcapacity in a time of weak demand is at the heart of the soft rate recovery, Tan said.
“From now until the end of 2018, there are still a significant number of new ships that are due to come in,” he said. “This poses a significant challenge for the container market, because the demand that we have seen in the past, which has historically averaged about 7-8%, is no longer there. In the meantime, capacity that was ordered back in 2011, 2012 and 2013, is still coming on stream.”
In 2017 alone, 11 ships of the 18,000+ TEU size are expected to come online, as well as another 24 ships of between 9,000 and 15,000 TEU – for the 2M Alliance alone. The OCEAN Alliance also expects a significant number of new ships: 19 in the 10,000 to 14,000 TEU size, but with additional vessels in the 18,000+ TEU range.
Tan told attendees of the conference that there is improvement ahead, but that it won’t happen until 2019, at least. “In 2019, the orderbook situation will have cleared up. The fact is, last year there were practically no orders being placed. What’s coming in over the next two years were ordered 2-3 years before. The benefits that the market expects to see from the slowdown in ordering of new ships is only going to be in 2019 onwards.”
For more on the Georgia Foreign Trade Conference, see the February 2017 issue of Asia Cargo News.
