As the container shipping industry recuperates from a
challenging market environment, concerns still abound over the looming
overcapacity as more new vessels are expected to come on stream in the
next two to three years.CMA CGM group senior vice-president for Asia Europe lines Nicolas Sartini told StarBiz 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 would
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 Clercsaid supply as of today was not significantly out of sync with demand.“However, the industry would phase in a 69% increase in the fleet of vessels above 10,000 20-ft equivalent units (TEUs) over the next two to three years.“This would not be matched with a corresponding increase in
demand and thus, new deployment opportunities would have to be created
for these vessels, or the vessels that would 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
co-operate to create cargo flows that could support them.“Smaller vessels would be made obsolete prematurely because their operating cost would simply not be competitive anymore,” he said.On freight rates, Sartini said the rates, especially on the Asia-Europe trade, had dipped to unnecessary 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.“Declining volume growth and overcapacity in recent years have
underlined the need to improve operations and efficiency in the
industry.“This has prompted the creation of other operational alliances
such as G6 and CKYH. Using the P3 network, the lines expect to be able
to improve their efficiency via better utilisation of vessel capacity,” said CMA CGM in a statement last month.Sartini said the P3 network had a stronger share on the Asia-Europe trade than on the Trans-Pacific.“Overall, these markets remain highly competitive and fragmented. There are more than 20 active players in each trade,” he said.The lines intend to start operations in the second quarter of next
year, but it will be subject to obtaining the approval of relevant
competition and other regulatory authorities.
WORLD SHIPPING
29 July 2013 - 20:28
Overcapacity Remains Concern in Shipping
As the container shipping industry recuperates from a challenging market environment, concerns still abound over the looming overcapacity as more new vessels are expected to come on stream in the next two to three years.
WORLD SHIPPING
29 July 2013 - 20:28
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