After a bumper few years in which profits soared to record levels, the liner industry is facing a perfect storm.
Amid a slowdown in international trade, resulting in falling rates, combined with an inordinate number of new builds in the pipeline, shippers could soon be in the driving seat once again.
Speaking at the recent National Association of China Shipowners’ Chinese New Year celebration, Evergreen chairman Chang Yen-i warned that, with the large number of new build mega-box ship deliveries beginning this year, liner operators could see a return of pre-pandemic rates wars if consumption fails to keep up with the capacity growth.
Quoted in online portal the Shipping Gazette, he said Evergreen itself had 49 vessels of 463 442 TEU capacity under construction, and according to online portal Loadstar, market leader MSC has the largest order book, with 133 ships for over 1.8 million TEUs being built, followed by Cosco (884 272 TEUs), and CMA CGM (816 476 TEUs).
Chang said that if the economy did not keep up with the growth of shipping supply, perhaps liner operators would embark on a price war, which is “the unhappiest situation for our industry, unless we can significantly adjust the capacity. If the freight war continues, it may be difficult for earnings from the transpacific, Asia-Europe and other important routes to escape falling below breakeven levels. Even small shipping companies may have losses”.
Yang Ming chairman Cheng Cheng-mount, who also attended the event, told journalists there was no strong sign of economic recovery. He said: "Although China has abandoned its zero-Covid-19 policy and is acting to stabilise its economy, we can see that throughput in the container terminals isn't significant, so it remains to be seen when the effect of the lifting of pandemic restrictions will boost the economy."
