Overcapacity continues to dominate the shipping industry
As we have seen, the development of volume – the movement of goods – in
global ship transport has lost momentum in recent years, despite not
experiencing a sharp drop as in 2009. The low growth in volume would be less
dramatic for the shipping companies in question if not for the growth in supply
(vessel and container capacity), which has been tending to outstrip demand in
the sector for many years now.
An immediate solution to the problem of the resulting overcapacity in the sector
does not appear to be on the horizon. In all three segments, the supply of vessel
capacity is likely to keep growing faster than demand. This is placing continued
downward pressure on freight and charter rates, which still remain on a low level
compared to the long-term average. As a result of these factors, shipping
companies’ finances are badly strained. Despite a difference in the development
of freight and charter rates depending on the type and size of the ship, as well
as the route travelled, oversupply and pressure on prices will generally remain
characteristic of ship transport for the time being. A consolidation process in the
form of takeovers and mergers has already resulted.
The recent bankruptcy of a
major South Korean shipping company fits this picture.