|Overcapacity to trouble container shipping for 3-4 years: SeaIntel|
|OVERCAPACITY will continue to upset the supply-demand balance in container shipping for the next three to four years and will mirror the highly volatile conditions of 2009, 2010 and 2011, said maritime analyst SeaIntel.|
|Despite capacity increased of 11 per cent, outpacing container volume growth at eight per cent, the outsourcing of production by the US and Europe to Asia is reaching saturation, and has prevented the mopping up of extra vessels on headhaul routes. |
There is a great danger that should previous attempts to correct imbalance be repeated, the market will nose dive, said the analyst, according to London's International Freighting Weekly. Market share battles on smaller trade lanes where vessel capacity has swollen and the lay-ups to restore freight rates have distorted the market by rapid increases that will be "followed by a significant decline."
"The nature of the inventory correction has the opposite effect. This will result in a sudden capacity shortage, pushing prices upwards sharply," SeaIntel said, adding that the end of slow-steaming could also create overcapacity in the future.