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Will More Capacity Mean More Congestion?

Drewry Shipping Consultants has released its Annual Container Market Review and Forecast for 2005/2006 and suggests that while global the global supply/demand balance will weaken by 2.9%, the new capacity entering the industry will not overwhelm demand.

The uneven structure of orders, however, suggests a 7.5% decline in the supply/demand index for east-west trades. That means a higher excess of capacity in those trades.

In July 2005, the order book stood at 1,233 vessels with an aggregate nominal capacity of 4.5 million twenty-foot-equivalent units (TEUs), Drewry reported. That’s equivalent to 60% of the existing fleet capacity. Vessels with capacity of 5,000 TEU or more dominate the orders.

The forecast did not offer any views on how the increased capacity and volumes would affect already congested ports.

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