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Broker warns Asia-Europe overcapacity, soft rates to dog bigger fleet

CHARTERING and sale and purchase shipbroking company, Braemar Seascope, has warned that shipping lines will remain under pressure despite improvements in the world economy which should help balance supply and demand, and lead to a more sustainable container market.

Broker warns Asia-Europe overcapacity, soft rates to dog bigger fleet

CHARTERING and sale and purchase shipbroking company, Braemar Seascope, has warned that shipping lines will remain under pressure despite improvements in the world economy which should help balance supply and demand, and lead to a more sustainable container market.

Broker warns Asia-Europe overcapacity, soft rates to dog bigger fleet
07 February 2014 - 00:59

Broker warns Asia-Europe overcapacity, soft rates to dog bigger fleet

CHARTERING and sale and purchase shipbroking company, Braemar Seascope, has warned that shipping lines will remain under pressure despite improvements in the world economy which should help balance supply and demand, and lead to a more sustainable container market.

The broker said it expected annual container demand growth in the four to five per cent range between now and the end of 2016, compared with an estimated increase of three per cent in 2013. 

It pointed to improving employment figures from the US and UK, the US Consumer Confidence Indicator ending 2013 on a five-year high and a 40 per cent improvement in consumer confidence in the 17-nation eurozone during 2013, the UK's Lloyd's List reported.

Earlier this month, the International Monetary Fund (IMF) also raised its global growth forecast for 2014 and 2015 to 3.7 per cent and 3.9 per cent respectively.

Meanwhile, the world container fleet is expected to grow at a similar level to demand, with a net increase of six per cent per year until the end of 2016. This contrasts with last year when demand grew three per cent and supply increased 5.7 per cent.

Braemar said that while the overall containership fleet was expected to increase by 7.1 per cent in both 2014 and 2015, there was an expectation that deliveries of vessels would be delayed, with potential order slippage as much as 25 per cent. The broker expects scrapping of vessels to continue at 2.5 per cent of the total fleet per year.

But while supply and demand are set to be more balanced on a global level during the next couple of years, overcapacity on the Asia-Europe trade lane will continue as this is where the majority of ultra large vessels on order are destined, Braemar believes. This is likely to result in a continuation of the volatile freight rates experienced on this trade lane.

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