MSI: Container Shipping Industry Sailing in Uncharted Waters

Image Courtesy: Hapag-Lloyd

The latest phase of mass consolidation continues to see the container shipping industry sailing in uncharted waters and has emphasized the extent to which liner companies are having to restructure their business models in order to survive, according to Maritime Strategies International (MSI).

MSI said that the actions taken by liner companies, both in terms of consolidating service provision and also redelivering chartered tonnage, mean that the worst of the downturn is over for the globally competitive operators.

However, much of the self-help being undertaken by the liner industry is piling pressure onto the already beleaguered charter owners. The recovery in freight rates has been in part a result of the redelivery and subsequent idling of vessels under charter owner control, whilst the consolidation of liner capacity implies the potential for greater operating efficiency and a concomitant reduction in demand for vessels.

“Overlaid on this negative backdrop is, in our view at least, a greater commitment to action with banks increasingly prepared to take haircuts to get values to reasonable levels,” James Frew, MSI Senior Analyst, said.

“Owners have now been pushed past simply using hope as a strategy for recovery and instead are looking at alternatives,” Frew added.

This restructuring and recapitalisation of the industry is being complemented by the textbook approach of heavy scrapping and scarce new orders. In this respect the industry appears to be doing what it can to help itself, but it remains to be seen whether this will be sufficient, MSI noted. Ultimately, the industry requires trade growth to dig itself out of the hole, but in the short term the dynamics favour liner companies over charter owners.

“If maintained and if accompanied by a sustained recovery in demand, this trend will lay the foundations for a gradual recovery in earnings post-2017,” Frew said, adding that “behind the headline trends persistent obstacles to reducing supply remain in place, whilst 2017 scheduled deliveries remain a major roadblock to a swifter recovery.”

Share this article

Follow World Maritime News

In Depth>

Events>

<< Jan 2017 >>
MTWTFSS
26 27 28 29 30 31 1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31 1 2 3 4 5

10th annual Border Security Conference

The 2017 conference will possibly be the most relevant and topical event to date as we enter our 10th successive year. With the rise of cross…

read more >

4th Ship Recycling Congress

The two day conference will consist of a number of informative presentations followed by interactive Q&A sessions, panel discussions…

read more >

Maritime Reconnaissance and Surveillance Technology 2017

After last year’s huge success the SMi Group is proud to announce the 2nd Maritime Reconnaissance and Surveillance Technology. The event…

read more >

Euromaritime 2017

The Euromaritime event will take place in Europe for three days. This is one of the major and influential trade events dealing with marine…

read more >