Bloomberg News

Container-Ship Deliveries to Extend Rates Slump, Alphaliner Says

October 17, 2012

Container-shipping lines will receive vessels able to hold 1.7 million boxes next year, undermining efforts to revive Asia-Europe rates that have slumped below break even, according to Alphaliner.

“That’s a significant amount of new capacity,” Tan Hua Joo, an analyst at the shipping-data provider, said today at the JOC TPM Asia conference in Shenzhen, China. The effect on spot rates for next year at least will be “significantly more severe” lows and “extremely short-lived” highs, he said.

The flood of new container ships means the global fleet will probably expand 9 percent next year, outpacing demand growth of 4 percent to 6 percent, Tan said. Asia-Europe routes will be particularly affected as about half of new ships next year will be larger vessels that can generally only be used on those trade lanes, he said.

China Cosco Holdings Co. (1919), the nation’s biggest container line, similarly said the industry may continue to struggle next year. The company, which also operates dry-bulk ships, has posted six straight quarterly losses.

“For a full recovery, it’ll still be at least another two to three years,” Ma Zehua, the shipping line’s general manager, said at the conference. Still, improvements in the global economy may mean that 2013 will be a bit better than 2012, he said.

Maersk Cuts

Asia-Europe container rates fell below break-even last month as Europe’s sovereign debt crisis depressed demand for consumer goods, according to London-based shipbroker ICAP Plc. A.P. Moeller Maersk A/S, the world’s largest container-ship operator, said last week that it would take 19 vessels off Asia- Europe routes to pare overcapacity.

China Cosco has tried to offset the wider shipping slump by boosting cooperation with other lines, including a tie-up on domestic routes with China Shipping Container Lines Co. that was announced earlier this month.

The companies’ two parents are continuing to explore ways of working together in container-shipping and other sectors, Ma said. He declined to comment on whether the two state-owned groups were likely to merge.

“This is up to everyone to guess,” he said. “It’s hard to give everyone a satisfactory answer.”

To contact Bloomberg News staff for this story: Alexandra Ho in Shanghai at aho113@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net


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