Worldwide container shipping capacity could increase by over 13% in 2008 and then slow to a rate just over 12% in 2009 and about 10% in 2010. This would be on top of an estimated increase in total fleet size of 15.4% in 2007, according to Drewry Shipping Consultants, bringing capacity to an estimated 10.9 million twenty-foot-equivalent units (TEUs).
The Far East/Europe and Far East/Mediterranean trades could begin slowing from the recent 15% to 25% growth rates, warns Drewry’s “Annual Container Market Review and Forecast 2007/08.” The weakening US economy remains a real fear for the future in view of the number of large (8,000 to 10,000 TEU) vessels planned.
On rates, Drewry noted that carriers continue to push Far East/Europe westbound rate restoration and extended the current year’s peak season surcharge through to February 2008.
Revised estimates of global port handling for 2006 was 440.4 million TEUs, equating to a world container traffic figure of 128.3 million TEU. In 2007, the traffic figure is expected to reach 142.9 million TEUs.
Global cellular fleet capacity increased 3.6% in the second quarter and is expected to show a 15.4% increase for the full year. This is what brings the world capacity figure to 10.9 million TEUs.
“The investment is being driven by the exceptionally strong Far East/Europe trade and perhaps, carriers’ fear of being left behind,” notes Drewry. “Risks of this investment strategy are considerable and if the market is not to be destabilized, will require the Asia/Europe trades to continue to lead the way for global growth.”
Carriers have not been able to increase rate levels despite attempts to balance the trades. “The May 2008 shipper contract negotiations will be crucial for the future of this trade, as will the outcome of the International Warehouse Longshore Union (IWLU) talks in July.”
Ocean carrier profitability improved for the first half of 2007 and could reach $205 billion for the year. This would be a 9.9% increase from 2006. Weighted east/west rates are expected to rise 2.6% to $1,438 per TEU and remain stable in 2008.
Important to note is the end of the European liner conference structure in October 2008, which will mean ocean carriers will be applying their own freight rate structures and, more importantly, their own surcharges.
