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Home News World Shipping News Container shipping volatility to continue for two more years, expert says
Container shipping volatility to continue for two more years, expert says PDF Print E-mail
Wednesday, 18 June 2014 08:01
Shpg Gazette 13/6/14

THE container shipping industry will endure a further two years of volatility
due largely to the ongoing supply surplus in the market, says SeaIntel Maritime
Analysis senior consultant Thorsten Boeck.

"The overall capacity situation is driven by the fact that there are large
numbers of very large vessels that are coming into the market over the next
couple of years, and they are pushing out what used to be large vessels, of
around 9,000 TEU, onto secondary services.

"We are already starting to see this happen and it will happen increasingly
over
the coming years. Capacity is growing more than demand, and we believe the
market is in for a rough, volatile ride for at least three years,” Mr Boeck
told
The Container Shipping Manager.

Some industry insiders and analysts have expressed hope that the current
mismatch between supply and demand will be resolved later this year; however,
SeaIntel’s outlook indicates that we will not see a turnaround at least until
2016.

If this is an accurate assessment, one would imagine that the liner landscape
that we see today will be drastically altered by that time.

Simply put, carriers will not be able to sustain losses for another three
years.
Some lines did manage to post a profit last year, but many did not. For the
companies that were able to earn money in 2012, these would be the likely
candidates to survive the current turbulence, but for those that are still in
the red, they could very well be gone, or merged into more financially stable
companies by that time.

Of course this is all speculation at this point in time, and for Mr Boeck,
three
more years of volatility does not necessarily preclude the possibility of some
positive stretches along the way, it simply means that these stretches will
likely be short-lived at best.

"I think it is obvious to everyone that the cycle has shortened tremendously
and
they are still shortening. We saw a catastrophe in 2009. We saw a best ever
year
in 2010, and then a new catastrophe in 2011. So the cycle is already down to
two
years [from seven years historically].

"In 2012 alone we saw a peak and a bottom. We believe that the volatility is
driven by overcapacity and as this gap widens in the coming years, we see that
those cycles will become even shorter,” he said.

Mr Boeck believes that while the market will be more volatile with potentially
multiple peaks and troughs within a year, the ups and downs of the market may
not be as steep as they have been historically.