7 Factors Needed for Balance in Container Shipping Markets
Coming off the back of eight years of oversupply balance is yet to be found in the container shipping sector and Seaintel ceo Alan Murphy outlines seven factors that will be needed to bring demand and supply back into balance by 2019 – 2020.
Speaking at the Asian Logistics and Maritime Conference (ALMC) in Hong Kong, Murphy, said that despite an improvement in the market this year the sector was a having a bit of a challenge in Q4 as lines have blanked almost no sailings, MANA correspondent reported.
He said the sector would not see a recovery in 2017/18.
In order for there to be a balance of demand and supply in container shipping by 2019/20 Murphy outlined seven factors that were necessary:
1 – A complete freeze on megaship orders
While both MSC and CMA CGM have placed orders for 22,000 teu plus capacity newbuildings in recent months these had not set the ball rolling yet.
2 – Continued high scrapping levels
The industry would need to see continued scrapping levels of 500,000 teu annually
3 – Healthy headhaul demand of 4 – 6% on the major trades
4 – No rate wars for market shares
5 – A closing of Asia – Europe services in tune with deliveries
Murphy said that with megaship deliveries on the trade increasing the capacity per service three more strings would need to be cut – equal to one per major alliance
6 – No disruption from ambitious new market entrants
SM Line has said it is aiming for a 10% share of the Pacific Northwest trade and this means other lines have to give up this share.
7 – No major increases in oil prices or new regulations