Slowing global trade and a bloated orderbook of large vessel capacity mean that container shipping is set for another three years of overcapacity and financial pain, according to the latest Container Forecaster report published by shipping consultancy Drewry Maritime Research.
The recent slowdown in world trade has forced Drewry to halve its forecast for container shipping growth for this year to just 2.2% and revise down estimates for future years.
Meanwhile, an additional 1.6 million teu of new capacity is being added to the fleet this year, equating to a growth rate of 7.7%.
As a result, Drewry’s Global Supply/Demand Index, a measure of the relative balance of vessel capacity and cargo demand in the market where 100 equals equilibrium, has fallen to a reading of 91 in 2015 - its lowest level since the recession-ravaged year of 2009.
Consequently, spot freight rates across most key trades have fallen to historical lows, particularly on the Asia to Europe, Asia to East Coast of South America and Asia to Middle East trades. Carrier reliance on the monthly general rates increase (GRI) mechanism and void sailings to adjust capacity has not worked.
“Were it not for the recent fall in bunker prices, shipping lines would be losing money,” said Neil Dekker, Drewry’s director of container shipping research. “They cannot continue to rely on this unexpected gift to maintain profitability.”
Drewry forecasts that its index will fall to its lowest level on record over the next few years, indicating that the overhang of excess capacity will be even greater than that experienced in 2009.
