Overcapacity could hit SA trades as lines bring on mega-ships

While north-south trades may not yet have been hit by the overcapacity that has caused global freight rates to plunge, that’s likely to happen in the not-toodistant future, according to a maritime analyst. It will be the result of the cascade effect as more large ships enter the Asia-Europe and the trans- Pacific trades and smaller and less-efficient ships are redeployed on the likes of the SA route. Journal of Commerce reports that the economies of scale that are driving carriers to replace their fleets with mega-ships will result in the consolidation of shipping lines or in the reduction of competition on customer service, according to a panel on the growth of ship sizes at the 12th annual Trans-Pacific Maritime Conference in Long Beach. The container industry is predicted to shrink to seven to 10 carriers by the mid- 2020s, according to Lars Jensen, CEO and partner of Seaintel Maritime Analysis quoted in the Journal of Commerce. “It may be eight, it may be 10, but there will be fewer players.” Jensen added that industry consolidation, which has stalled in recent years, will start again by 2015 because of the need to order and pay for more ships with capacities of more than 10 000 TEUs. “From now until the end of 2014, the mega-ship fleet will grow by 120%,” said Jensen. “By 2015, megaships will account for more than half of the capacity of the total container fleet.”