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Saturday, April 14, 2012

Staggering overcapacity in the global shipping fleet.

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I recently received a commentary from Ferrier Hodgson with some amazing facts I thought I'd share on the global shipping fleet and cargo volumes.

In January 2011 there were 103,392 cargo ships operating globally. This number of ships grew an amazing 54% from 2005 in order to meet a pre-GFC high demand.

In this period the number of container ships grew by 83% and bulk carrier numbers grew by 63%. The growth in shipping capacity completed outstripped the growth in seaborne cargo which for the same period was only up 27% to 8879 million tonnes and.....the global fleet is still growing. About 16% more new ships are being added in 2012 from orders placed by ship owners years ago.

A massive imbalance in supply and demand in shipping has been created. Bulk carriers have been the worst affected with current charter rates dropping to the lowest levels in about 30 years.

The value of ships has dropped by about 30% which is causing financiers to get nervous about their security position.

For shippers and freight forwarders this situation is mostly benefiting them. It is leading to some very keen freight rates in some trade lanes as a result of carriers lowering their profit margins in an attempt to maintain or capture greater cargo volume.

The downside is that some ship owners are in a very precarious financial position and cannot withstand much more stress from ongoing operating losses and devalutions of their fleet. Most carriers are continuing to adopt cost cutting measures by dropping port calls and steaming more slowly to save fuel costs.

A consolidation of operators looks inevitable unless cargo volumes really pick up soon. With a lethargic global economy in general, I can't see that sort of growth in trade happening for a while.

All for now,

Brad Skelton

The Shipping Bloke

1 comment:

  1. I don't have tons of experience with international shipping companies, but the one I have been using for the past few years has been doing a stellar job. However, the consultant I speak with every week keeps telling me how terrible the demand factor has gotten. I hope that this industry finds equilibrium soon.

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