Extended down cycle hurting north/south trades

Trade routes not lived up to expectations in terms of cargo flows.


Drewry's


Drewry’s Q1 2014 Container Forecaster report highlights that the industry remains in an extended down cycle. This is being accentuated and extended by the constant delivery of new ships. The global cascade is now hurting the balance of the north/south trades.

Some of these trade routes have also not lived up to expectations in terms of cargo flows and the sharp influx of many new ships of at least 8,000 teu has resulted in significant declines in spot freight rates, particularly on the Asia to East Coast South America trade.

The report said that bigger ships may be delivering carriers the lower unit costs carriers seek, but the supply/demand imbalance coupled with the desire by most operators to protect their market share is a toxic mix for overall profitability. This is why all focus is now on reducing costs and Maersk Line remains the “best in class.”

Drewry Maritime Research is forecasting 5.7 per cent global supply growth for 2014, followed by 6.7 per cent nextyear, with the emphasis on the delivery of 115 more ULCVs and a large number of ships in the 8,000-10,000 teu category. They say that NYK will confirm an order soon and Cosco has now re-entered the fray. CMA CGM’s decision to upgrade some of its ships to the 18,000 teu level may also instigate another injection of capacity.