It is probably premature to conclude year 2014 for the liner shipping industry at this stage, but the year-to-date operating results would indicate that the industry is indeed in a better shape than it was the past two years.
We would attribute this to falling fuel prices, especially during the second half of the year, and congestion at some key hub ports that require additional tonnage to complete vessel schedules. Both have helped minimize costs and balance out tonnage supply, thus bringing the majority of liner operations back to black. This is in spite of the fact that the global economy is still struggling on its way to full recovery.
With more new built mega-ships on the schedule for delivery in 2015, the problem of overtonnage will persist and maybe even deteriorate in some trade lanes, particularly the deep-sea. We need to closely observe how emerging new alliances rationalize capacity while terminal operators adapt their operations and systems to address further congestion brought about by increased ship sizes and more complex bay planning requirements from ship operators.
Given moderate global GDP growth rate prediction for the year, demand may not be in liner shipping’s favor. Cargo volume originating from traditional Far East main ports may no longer provide sufficient support to fill up mega-ships despite the formation of new alliances. As a result, container volumes originating from way ports may play an important role and, in turn, may mitigate the cost advantage of deploying mega-ships.
P.T. Chen, Chairman, Wan Hai