Tag: oversupply

Two years ago, the Boston Consulting group highlighted that slow growth in global demand coupled with a persistent oversupply of vessel capacity, was a major industry challenge. Although global container demand did improve in 2017, overcapacity is expected to remain in the range of 6% to 9% in 2020.

Commenting on the Company's results for the fourth quarter of 2017, Stolt-Nielsen Limited CEO, Niels G. Stolt-Nielsen, said that the chemical tanker market continued to soften driven by oversupply of tonnage, combined with the impact from Hurricane Harvey.

With contraction in vessel supply and healthy demand growth, the dry bulk shipping market is expected to recover from 2017 onwards.

Rates for panamax dry bulk carriers on key Asian freight routes are expected to fall Rates for panamax dry bulk carriers on key Asian freight routes are expected to fall next week with an increasing amount of tonnage weighing on an already oversupplied market, ship brokers said.The rate for panamax vessels traveling via the transpacific route dropped 6 percent to a 12-day low of $11,581 a day on Wednesday from $12,321 last week on ample vessel supplies and limited demand.''We have seen a good volume of tonnage entering the market, though fresh cargo orders are fewer in number,'' said broker firm ICAP. ''It is perhaps too early to say, but this may lead to a softening in rates.''The Baltic Exchange's main sea freight index on Wednesday eased three points or 0.26 percent from the previous session to 1,149 points.Technicals indicated the benchmark index would retrace to 1,036 in a week, as it may fail a resistance at 1,137.Benchmark capesize fixture rates from Australia to China eased nearly 2 percent to a one-month low of $7.508 a tonne on Wednesday from $7.638 last week on slower trading activity.''The cape market has continued to be depressed,'' said broker firm Fearnleys. ''The only ...

Main index drops 4.4 percent The Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, fell for a fifth straight session on Wednesday due to lack of demand.The index had been expected to come under pressure early in the New Year, typically a slow period for the freight market that is likely to be exacerbated by the oversupply of vessels."There's not enough of anything being shipped to absorb vessel supply," one major European shipbroker said, adding, "It can only get worse."The index, which gauges the cost of shipping commodities such as iron ore, cement, grain, coal and fertiliser, dipped 72 points or 4.43 percent to 1552 points.Rising tensions betweenIran and the United States and the European Union were being watched in the tanker market.These tensions have had little effect on the dry bulk market, however. Minimal bulk commodity tonnage moves through the Strait.The U.S. and the EU on Wednesday agreed in principle to ban Iranian oil imports but have yet to decide when an embargo would come into effect.Iran has warned that it could close the Strait of Hormuz to oil shipping in a response to the sanctions.The Baltic's capesize index fell by 6.33 percent to ...

The Australian consumer watchdog warns The Australian Competition and Consumer Commission's (ACCC's) annual report on stevedoring operations comes as new terminals are well underway in Sydney and Brisbane.A new entrant, Hutchison Port Holdings, is expected to commence operations at those ports in 2013.The ACCC says the developments will be an important and positive step for Sydney and Brisbane's ports as well as the economies that rely on them.For many years the watchdog had expressed concerns that persistently high profitability and a lack of rivalry on prices meant stevedoring companies Patrick and DP World faced only limited competition.If container numbers continued to increase at current rates the Port of Melbourne could face capacity problems, similar to those observed at Port Botany, by as early as 2015, the report said.The Victorian Government is currently debating how it will provide for future container capacity and increased competition at Melbourne."Opportunities for new entry into Australian stevedoring are rare. This makes them all the more important when they do arise," ACCC Chairman Rod Sims said."We would welcome the Victorian government taking advantage of the need for new investment by introducing a third competitor into the port of Melbourne," Sims said.The ACCC Chairman further called for ...

Overcapacity on main trades depresses vessel value as well as freight and charter rates Containership owners have seen billions of dollars wiped off the value of their fleets over the past year.Massive overcapacity has squeezed not only freight rates, but also the worth of steel on the water, the latest service from VesselsValue.com shows.The world's largest boxship owner, AP Møller-Maersk, has seen the value of its containership fleet fall 24% in the past 12 months. Its 222 vessels currently in service are now worth US$9.1 billion, compared with $12 billion at the start of November last year.Similarly, major owner and operator MSC's fleet of 202 containerships in service at present are worth $6.9 billion, compared with $8.4 billion 12 months ago.A report in IFW's sister publicaton, Lloyd's List, reveals that the VesselsValue data shows that today's fleet values are closing in on what these ships would have been worth in November 2009 - continued declines in freight and charter rates this year have pushed asset values back to the lows of two years ago, when the containership market was suffering the worst downturn in its history.Online ship valuation service VesselsValue.com was launched this year by London-based sale and purchase broker ...

Weak demand growth in the European and US economies The container shipping industry is heading towards a prolonged slump that could last longer than the 2009 downturn, warns Shipping Gazette, quoting Paris-based maritime consultancy Alphaliner.The current slump, unlike the 2009 recession, is caused by an oversupply of capacity and weak demand growth in the European and US economies. In the absence of a strong rebound of the Western economies, trade growth is expected to remain behind fleet growth for quite some time, it is said. The lull in containership orders between the fourth quarter of 2008 and the first quarter of 2010 brought the order book down from 60 per cent to 26 per cent of the fleet, but the strong recovery in 2010 led many shipping to add to capacity hoping a sustained recovery for the industry.This triggered a new wave of containership orders and the 2.3 million TEU of capacity contracted since June 2010. Some industry sources continue to underestimate the impact of the excess supply problem, citing supply growth figures of 7 per cent for 2011 and 2012 and a capacity shortage in 2013 but the report emphases that the growth rate for 2011 and 2012 will ...

New vessels on order amounting to 45 per cent of the current fleet The dry bulk shipping market is being hit by an oversupply of vessels and slower world trade.The deteriorating market has hurt operations at companies such as China COSCO​, which has had vessels seized for non-payment.There are just too many ships and the oversupply will worsen, with new vessels on order amounting to 45 per cent of the current fleet.This is a stark contrast to the 6 to 7 per cent trade growth some analysts forecast.The expected result is more companies going under, and new-order cancellations.Divay Goel, general manager of Siva Ships International, said: "If the global economic slowdown spreads to India and China, then definitely we would see a reduction in demand for raw materials...then we might see a further depression of rates - continued depression of rates - so I think any recovery we were expecting say in 18 months or so might get extended up to 24 months or later."Already, international shipping prices of dry bulk cargo are down by 85 per cent since the highs in 2008.China COSCO is said to be feeling the heat, though it has sought to reassure investors that its ...

No respite likely from newbuilding cancellations The threat of oversupply in container shipping will not be reduced by cancelled or delayed vessel orders this year, according to one analyst. Research by Paris-based Alphaliner showed that the number of vessel orders cancelled or delayed would slip to pre-recession levels this year, following a dramatic increase in 2009 and 2010.Of the 1.87 million teu of vessels on order towards the end of 2008 and due for delivery in 2009, only 57% were actually delivered.This trend continued last year, with only 66% of the 2.09 million teu of vessels due for arrival actually delivered.Alphaliner said this level of cancellations and deferrals would not continue in 2011, suggesting slippage levels would fall to around 5% - in line with historic levels."Some sources say a significant percentage of ships will not be delivered on time in 2011 and beyond," it said."These assertions are wrong, as the use extrapolations based on the past three-year slippage average, which is distorted by the effect of the crisis and therefore not representative of the long-term trend."This leads to erroneous conclusions about the future supply-demand balance."Alphaliner pointed out that some of the previous non-deliveries were caused by cancellations at the ...