Container shipping striking a balance?

Date: Tuesday, February 27, 2018
Source: American Shipper

 The international shipping organization BIMCO said 2018 may just be the year in which container shipping growth and demand growth are the same.
   Peter Sand, the chief shipping analyst for the Copenhagen-based organization, also believes the U.S. East Coast may see more big ships as container carriers increasingly take advantage of the new locks at the Panama Canal, which opened in June 2016.
   “Overall demand growth is expected to be lower than in 2017, but still high enough to potentially improve the fundamental market balance,” Sand said. “BIMCO forecasts demand to grow by 4.0-4.5 percent against a fleet growth of 3.9 percent in 2018.
   “Watch out for the North American inbound loaded containers where we expect a change in 2018,” he added. “We saw very strong growth in 2016 and 2017 for the U.S. West Coast imports, and in 2015 and 2017, for the U.S. East Coast imports. We have yet to see the full effect of the elevated Bayonne Bridge, allowing ultra-large containerships to pass and enter the New York/New Jersey port.
   “For the whole of the U.S. East Coast in 2017, the amount of inbound loaded containers grew by 10.1 percent," Sand said. "It took the industry a while to embrace the expanded Panama Canal locks - but they are making use of them now. 2018 is likely to be the year where many container line networks calling the U.S. East Coast will become fully up-scaled by deploying ultra large containerships.”
   While freight rates fell between August and the end of 2017, most liner companies succeeded in pushing rates higher in early January 2018, Sand pointed out.
   "Liners were the most successful at maintaining higher freight rates on the U.S.-bound trade lanes, both east and west coast," Sand said. "On the other high-volume trades into the Mediterranean and North Europe, the announced general rate increases (GRI) lifted freight rates too, but to a smaller extent.”
   Sand said that at the start of 2018, China instituted a ban on 24 types of waste products, including waste paper and waste plastic, which has big implications for the transpacific backhaul trade. According to MDS Transmodal, 1.46 million TEUs of pulp and waste paper moved from North America to Asia in 2017, and according to Drewry, 4-5 million TEUs could be affected by the Chinese ban, Sand said.
   While other countries - including Indonesia, Taiwan and Vietnam - may continue to accept those products, he said China has greater capacity to handle such waste products.
   As far as supply is concerned, Sand forecasts 1.05 million TEUs of capacity on containerships will be added in 2018 and about 250,000 TEUs will be demolished, as opposed to the 398,000 TEUs demolished in 2017. That will result in a fleet growth of about 3.9 percent this year.

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