The container shipping industry lives somewhere in the tri-state area of Chaos, Flux, and Transition. While everyone would rather live somewhere in Stability, there seems to be no consensus on where it is or how to get there. For the carriers, Stability means profitable rates. Last year the industry as a whole was profitable for the first time in years, but can they sustain it? Many have been unable to recapture higher bunker costs through surcharges, and there are prediction
What a change eight months can make. At the beginning of the year, carriers and big consulting houses projected a bumper year all round for the ocean cargo business. Global Port Tracker suggested that growth in import demand in 2018 was going to be half that of 2017. At the same time, we also noted that shipping capacity would continue to increase, which would put downward pressure on freight rates after the first quarter. The pressure on freight rates has certainly come, and
Going into 2018 the container shipping industry faces a fundamental problem: too many large vessels. The carriers have invested heavily in “megaships” to reduce slot costs and emissions, and continue to take delivery of ever-larger examples. The oversupply of vessels overall and large vessels in specific creates a double-edged problem: -Oversupply has depressed rates and profitability in an era of slow trade growth, despite partial recoveries by some carriers in some trades.