Container Ship Market Will Enter A Period Of Volatility

- Nov 30, 2017-

    As the first quarter of 2018 containerized cargo volume will show a seasonal decline,

The supply of shipping capacity will continue to grow. The container shipping market will likely enter a period of volatility. The freight forwarding industry will face a cyclical seasonal challenge.

    BIMCO said that for the industry outlook, taking into account the freight rate is still declining in mid-October, so to stop the tariff decline will be to restore the balance between supply and demand priorities. The freight rate of the freight transportation industry dropped again, resulting in the loss of the industry profit.

    Since the end of July, average spot rates in U.S. and European routes have dropped 22%. Despite the strong demand, due to the shipping company in order to test the strength of the market, the deployment of capacity to the trading market, resulting in sharp decline in spot freight. BIMCO said that only in this way, the real demand of the container shipping market will be reflected.

    From May to September, the remaining capacity of container ships further dropped. As of October 2, 2017, the idle capacity further dropped to 495,000 TEU.

    BIMCO stressed that the container freight volume always started to decline from the third quarter, and the transportation industry is entering the winter. Therefore, in order to reduce losses, individual route trade and capacity deployment management across the network will be indispensable. Overcapacity is expected to remain a challenge for the industry in the coming years. Maintaining the current speed of navigation is the key to getting the market back on track.

    In terms of supply, the container fleet has entered a stable year with a delivery of 898,000TEU of new vessels in the first nine months of this year. BIMCO expects the container ship to deliver 1,100,000TEU this year, up from 905,000TEU in 2016, but some of the vessels may be delayed until 2018.

Dismantling, the first nine months of dismantling capacity of 356000TEU. Compared with 2016, the average age of dismantling vessels increased from 19 years to 21 years. At the same time, the average size of container vessels dismantled also dropped. In 2016, the average size of container vessels dismantled was 3373 TEU, with an average age of 19 years. By 2017, the average size of dismantling container vessels was 2891 TEU with an average age of 21 years .

In general, BIMCO forecasts a net increase of 3.3% in container fleet capacity in 2017.