In 2018 there will be many deliveries," Maersk Line CEO Soren Skou was quoted as saying on the company's November 7 third-quarter earnings call.
LONDON: A total of 351,065 TEU of capacity is anticipated to be scrapped in 2018, which would lead to the net capacity of the global containership fleet expanding by 7.1 per cent provided none of the deliveries of the 78 ships over 10,000 TEU totalling 1.2 million TEU are postponed, forecasts IHS Markit.
"In 2018 there will be many deliveries," Maersk Line CEO Soren Skou was quoted as saying on the company's November 7 third-quarter earnings call. "The idle fleet has been absorbed and supply growth broadly looks manageable in the coming years, even if bumps on the road can be expected from some orders." Mr Skou expects global supply to rise five to six per cent in 2018.
"The other thing that I want to reiterate is that overall supply-demand fundamentals look good," he said.
"We have broad-based strong economic growth in the United States, in particular, but certainly also in Europe. We have seen strong growth in China and India, and even Russia."
IHS Markit forecasts the global container trade will increase 4.9 per cent in 2018 to 144 million TEU.
By comparison, this year demand looks set to outpace capacity growth by 1.8 percentage points. The industry has scrapped 400,000 TEU of capacity so far this year, and IHS Markit forecasts scrapping activity for the whole year will reach 671,989 TEU before declining 47.8 per cent year over year in 2018.
Industry analyst Alphaliner anticipates that the global fleet will grow 5.8 per cent in 2018 as container volume rises 4.8 per cent.
To balance supply with demand, fleet and volume growth would have to mirror that of 2017 for at least the next year, after volume growth in 2014 and 2015 failed to keep pace with capacity growth. In 2015 the fleet expanded 8.1 per cent as volume rose just 1.1 per cent.
The gap between fleet and demand growth in 2015 set the stage for the bankruptcy of Hanjin Shipping and rapid consolidation of the container shipping industry, with a string of mergers and acquisitions.
The fallout from Hanjin's bankruptcy enabled container lines to attain higher annual contract rates for 2017, many of which were nearly at breakeven levels for carriers. Although some trans-Pacific contracts were signed at historic lows of US$700 per FEU in 2016, contract rates this year were double that rate.