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Friday, 23 February 2018

Hapag-Lloyd CEO Dismisses Overcapacity Fears

The container shipping industry has braved the storm over the past couple of years getting to grips with tonnage overcapacity through consolidation, mergers and acquisitions, as well as abstaining from ordering new ships.

The recovery the container sector made last year is fragile and improved freight rates are likely to become a short-lived trend.

Specifically, as gains are starting to be reaped from the industry-wide efforts to bolster earnings, worries have emerged that a massive wave of tonnage influx may ensue since owners are rushing to the yards to rejuvenate their fleets ahead of the 2020 Sulfur Cap and BWMC implementation.

Namely, liner majors have broken the ordering silence from December 2015 seeing that companies such as Evergreen and Yang Ming have announced investments in 20-strong batches of boxships each.

The ordering spree was kicked off in the third quarter of 2017 when two container shipping giants, MSC and CMA CGM, ordered a total of twenty 22,000 TEU mega boxships at Korean and Chinese shipyards.

What is more, the ordering flurry is likely to continue as Hyundai Merchant Marine (HMM) readies to announce details of its mega-ship order.

However, according to Hapag-Lloyd's CEO, Rolf Habben Jansen, there is no room for overcapacity fears.

"I don't think we have to fear massive overcapacities again. If you count in that container shipping is still a growth industry at 4 or 5 percent per year, we might soon have a pretty balanced situation," Jansen said.

The figures correspond to BIMCO's demand growth forecast of 4.0- 4.5 pct against a fleet growth of 3.9 pct in 2018.

Hence, demand is still high enough to potentially improve the fundamental market balance.

Hapag-Lloyd, fresh from completing the integration of its business with United Arab Shipping Company (UASC), has no need to order new tonnage as UASC provided it with modern tonnage influx.

As disclosed earlier, Jensen believes that the consolidation in the sector would continue, further reducing the number of largest shipping firms as they merge their businesses, bringing the total to nine out of former 20 largest shipping companies.

February 22, 2018 by WorldMaritimeNews

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