Vessel capacity growth to outstrip demand in 2011: Drewry

THE supply and demand balance in the container shipping trades was tipped in favour of the freight forwarders and shippers this year to the detriment of the shipping lines, according to the director of Drewry Supply Chains Advisors Philip Damas.

As freight rate volatility has increased in the last few years, Drewry figures indicate the length of time between up and down cycles is shortening.


Speaking at the TradeExtensions seminar at the Multimodal exhibition held at the NEC in Birmingham, Mr Damas said that in spite of Drewry forecasting global container growth of seven per cent in 2011, he expected the level to be surpassed by increases in capacity this year, reports London`s International Freighting Weekly.


Mr Damas stressed that 1.6 million in capacity is to be delivered this year out of four million TEU on the order book for new ships due to be delivered over the next four years, which is equivalent to 28 per cent of the global fleet at present.


"This is a reasonable sized order book, but if you are a carrier; the bad news is that a lot of this new capacity will be delivered this year," said Mr Damas. "We have seen a fair amount of new capacity, so I think it is a buyer`s market."


Worryingly, most of the newbuildings will be more than 7,000 TEU, so they will likely be deployed on the east-west trades, chiefly Asia-Europe, rather than north-south routes, the report said.


He pointed out that the CKYH Alliance plans to add nearly 500,000 TEU of capacity to Asia-Europe this year, the Zim/Evergreen/CSCL alliance had already added around 450,000 TEU, and there was speculation that MSC was preparing to commence a new Asia-Europe service.


On a more optimistic note, Mr Damas said the situation could improve next year as demand is expected to rise 10 per cent and the total capacity of newbuilding deliveries is forecast to be lower than this year`s at 1.2 million TEU.