THERE is a wealth of information available throughout the container shipping industry in terms of supply and demand projections. The only trouble is that a number of these forecasts appear to be at odds with each other.
A cursory glance of some of the market's leading authorities on the topic of supply and demand growth reveals some agreement at times, but at other times there are some rather surprising discrepancies.
Let's first look at some of the "crystal-ball gazing" on supply growth this year...
In the latest edition of Containerisation International (CI) it states that is "expected" that supply will grow between 6.5 per cent and 7.5 per cent.
BIMCO, on the other hand, are predicting an increase in supply of around 14.5 per cent, before taking into account the anticipated level of vessel scrapping in 2013. After vessel scrapping BIMCO is forecasting an increase in supply of approximately 12 per cent.
This is between 4.5 per cent and 5.5 per cent higher than the rate forecast by CI.
Clarkson Research Services and Drewry Maritime Research enter the picture at either ends of the CI-cited projection range.
Clarkson suggest an increase in supply of 6.5 per cent and Drewry expect a 7.5 per cent increase this year.
On the demand side, this is where we really begin to see some variances.
CI offers us a rather broad growth estimate, stating that it is "generally believed" that demand will grow between 5.5 per cent and 7.5 per cent year on year. So we see even within the one forecast there is very little clarity.
If there is 5.5 per cent growth in demand then we are looking at a potentially substantial supply overhang of anywhere between one and 6.5 per cent, based on the supply projections presented above.
If 7.5 per cent is the more accurate projection, then supply and demand would presumably be balanced, or there could even be a supply shortage - that is of course assuming that the BIMCO supply growth projection is grossly inaccurate.
Clarkson's analysts favour the more conservative demand growth estimate of 5.4 per cent, while Drewry is even more conservative at just 4.5 per cent.
Alphaliner also believes that demand growth will be conservative this year, but it too presents us with a new number to ponder with an estimate of five per cent.
Naturally, predicting demand is not easy. But shouldn't there be a more standardised way of addressing these projections, both for supply and demand?
This would certainly help clear up what is essentially a very foggy outlook today. Based on the above projections we are potentially looking at supply growth of 12 per cent versus demand growth of just 4.5 per cent.
At the other end of the spectrum we could be looking at a supply increase of 7.5 per cent and a demand increase of 7.5 per cent.
If there are going to be such divergent forecasts, at least there should be some solid data and argument to back up why the analyst believes this forecast or that forecast to be accurate. It should not be acceptable simply to say supply is expected to grow by five per cent, 10 per cent or demand is believed by "many" in the industry to grow three or four per cent this year.
This leaves the industry in the unenviable position of having to pick which one is accurate, if any. In fact, if all of these forecasts are so different from one another, should we put any stock in any of them at all?
In a conversation with this publication a few years back Port Metro Vancouver chief executive officer, Robin Silvester, spoke to us about some of the problems he faced at the time in his role, based on the divergent numbers and methodologies that were used for measuring various statistics, such as container numbers at his port.
To solve the problem he brought the road, rail and maritime parties involved in port operations at Vancouver together where they agreed on a standardised method of counting containers and bulk shipments, among other items.
By standardising this process the port managed to resolve the many arguments that had previously broken out over the different numbers each party was citing due to the different standards being used.
The end result was clarity. The container shipping industry is a turbulent enough as it is. Greater clarity would presumably help to also provide greater stability.
Supply and demand projections are vital for the industry, yet if there are so many different estimates that may take into account different factors then clearly this makes for greater confusion and more turbulence.
In saying this it must be noted that this publication too has used a variety of sources to provide the public with an idea of what is happening in terms of supply and demand as well.
This is done for the same reason that other publications do it, to provide the market with some guidance as to what to expect in the coming year. And surely, what is available at present is still better than nothing at all.
But perhaps it is time for the industry to begin looking at a standardised way of measuring the growth of these two important parameters.
It is conceivable for supply growth at least because we can view a physical orderbook, while demand is always going to be more difficult to gauge.
The solution is certainly not an easy one, but at least there should be some talk about how a solution might be found. After all, dialogue is the first step forward.
So on that note, let the discussion begin...