Modest recovery forecast for box trade

Despite strong volume increases in the opening months of this year, worldwide ocean container trade is expected to see only a modest recovery over the next couple of years, growing by around 11 percent in 2010 as a whole and five to six percent in 2011.

Meanwhile, global container shipping capacity looks set to increase by 25 percent between now and the end of 2011 as current idle capacity is brought back into operation and new vessels are deployed. The industry could even resume a normal pattern of new vessel ordering by around the third quarter of that year.

Those were some of the key future trends for the worldwide container shipping sector predicted at the 12th Global Liner Shipping Conference 2010 in London.
Discussing the latest developments in ocean trade flows, Mathijs Slangen, Netherlands-based senior analyst, cargo advisory, for global advisory and investment management group Seabury, pointed out that this year's Chinese New Year period had seen a much smaller dip in the volume of containerised exports from China than in recent previous years.

"The February 2010 total was down 15 percent on January, whereas in 2009 and 2008 the average month-to-month fall between January and February was around 30 percent. That is quite an interesting development. The key question, though, is whether that was a restocking phase or whether we are seeing a structural recovery in trade," he said.

Expanding on that last point, Slangen said that following strong growth in the final months of 2009 and January/February this year, the Chinese Purchasing Managers' Index (PMI) had flattened out in March. Based on that trend, total Chinese containerised trade (imports and exports), which generally appeared to correlate with the PMI, was expected to stabilise from the end of the first quarter. He added that the recent flattening out of the PMI indicated that the increase in late 2009/early 2010 was in fact "predominantly a restocking of volumes".

Turning to the overall global containerised trade picture for this year, Slangen said analysis based on seasonally-adjusted trade development over the period 2006-2009 suggested that if the monthly growth pattern was similar to that of 2007 (the last full year before the global economic downturn began to be felt), 2010 would see year-on-year growth of 11-16 percent.

"However, that is without a dip or correction which we expect in the second quarter of this year. So it is realistic to say that 16 percent is a little high and growth will actually be around 11 percent - quite a modest recovery, really. For 2011, year-on-year growth could be five to six percent."

Philippe Hoehlinger, France-based vice-president risk management, corporate, of SeaAxis, a niche container leasing company focused on special equipment, outlined recent and likely future trends in global container fleet development over the next couple of years.

Looking back, he said vessels totalling 500,000 TEUs of capacity had been scrapped since the beginning of the global economic crisis in September 2008. Prior to that, scrapping had been "negligible".

However, even though scrapping had increased, it remained at a very low level, only four to five percent of the total global fleet.

Regarding the laying up of capacity, Hoehlinger said the idle container shipping fleet had reached a peak in December 2009, with the combined figure for liner operators and charterers hitting 1.52 million TEUs, 11.7 percent of the existing fleet. By mid-March this year that figure had dropped to 1.22 million TEUs, equivalent to 9.3 percent of the fleet. "At this pace it should go back to early 2008 levels in spring 2011," he said.

"However, if you look at the figures for the liner companies alone, in December 2009, the idle fleet was 871,000 TEUs, 6.7 percent of total fleet capacity. Currently, the idle fleet for that sector is 630,000 TEUs, 4.8 percent of total fleet capacity. At this current pace, the idle fleet for liner shipping companies will be fully absorbed by the end of 2010," said Hoehlinger.

He went on to confirm that orders for new ships over the last 18 months had been minimal. The vessel capacity order book should decrease from a current 4.2 million TEUs to 3.6 million TEUs at the end of 2010, said Hoehlinger, with 700,000 TEUs worth of capacity having been delivered and just 100,000 TEUs of new capacity ordered. It should fall again to three million TEUs at the end of 2011 following the delivery of capacity totalling 1.7 million TEUs in that year. "But there should not be any more cancellations"," he added.

"Orders should start again in the third quarter of 2011 and should total 500,000 TEUs at the end of that year."

The net effect of all those predicted developments, suggested Hoehlinger, was that the total available global container shipping fleet should increase from a current 13.1 million TEUs to 13.6 million TEUs by the end of this year and to 14.5 million TEUs by the end of 2011.

Discounting idle capacity and slow steaming, the fleet actually being fully operated was currently 11.4 million TEUs but should grow to 12.8 million TEUs by the end of 2010, an increase of 12 percent, and to 14.2 million TEUs at the end of 2011, a rise of 25 percent over the current figure.

(Source: Cargo News Asia)