Over-supply of shipping capacity exceeds 1.5 billion tons

There is a global surplus of 1.5 billion tons of shipping capacity, according to the 2012 Review of Maritime Transport by the United Nations Conference on Trade and Development. Supply expanded at 10%, while demand grew by 4% during 2011 to reach 8.7 billion tons, according to the report. Growth in world merchandise trade “lost momentum”, growing at 5.9% compared to the 13.9% recorded in 2010. The world fleet has increased by 37% in four years. “This supply and demand mismatch is bad news for the industry and for market profitability, especially in view of the continued growth in ship supply capacity and the current fragile and uncertain economic outlook which threatens prospects for a robust growth in demand,” it says. Rates have come under pressure, with “substantial freight rate drops” being reported in the bulk, liquid bulk and containerised cargo sectors. The average cost of shipping a 20-foot container from Shanghai to Northern Europe, for example, fell from $1789 in 2010 to $881 in 2011. The average rate for shipping a 40-foot container from Shanghai to the West Coast of the United States declined over the same period from $2,308 to $1,667. Global port throughput expanded at 5.9%. Developing country ports loaded some 60% of world seaborne trade by volume, and unloaded 57% of the world volume. “That is a remarkable shift away from previous patterns, in which developing economies served mainly as loading areas for raw materials and natural resources,” says the report. INSERT ‘This supply and demand mismatch is bad news for the industry and for market profitability.’ CAPTION Supply expanded at 10%, while demand grew by 4% during 2011 to reach 8.7 billion tons.