Cargo shipping has hit its fullest point, as analyst say that in the year 2018, container over capacity will threaten global shipping carriers.
With more than 220 cargo ships scheduled for delivery in 2018, realisations of container shipping lines across the globe are expected to come under pressure next year because of oversupply.
Shipping griefs
Following the year 2017, which had a market improvement for container business segment, the cargo demand picked up across the globe with trades in a upswing, says industry officials.
This trend has a little good in the year 2018, as Subrata K Behera, manager (ports and containers research), Drewry, a UK-based maritime consulting company says, “Container shipping lines will have to act cautiously next year as any kind of aggression in adding capacity will only hurt the business”.
Indian context
Despite the global concern of overcapacity of container, India seems to be least affected by this shipping climate. Hitesh Avchat, senior manager, Care Ratings, points that India’s impact is expected to be minimal as select bulk commodities are also getting containerised leading to increased demand for the container business in the domestic market.
He also adds, “Steel, scrap metal and even iron ore is getting containerised in Indian market. Due to this, the impact of overcapacity globally will have very limited impact on India’s container business in 2018”.
However, analysts predict that in 2018 India’s container market growth is expected to be around 8 – 10 percent which is a downfall from its later achieved growth of about 10-11 per cent.
In India, global shipping lines such as CMA CGM, Maersk Lines, and Geneva-based Mediterranean Shipping Company SA have presence in container segment with Shipping Corporation of India being among the domestic players.
Global strategy
Analysts suppose to opt for demolishing older vessels hoping to help maintain some balance in the market and in the demand-supply equation. Also, it is advised to have some amount of deliberate idling.
Behera comments on this idling by saying, “Idling of a vessel also comes at a cost, hence cannot be done frequently. But such a move can be made taking into consideration other business indicators.”
Dolhen from CMA CGM, has strategic plans which is revealed as he says, “We are growing cleverly. We want to keep the market stable and strong. And for that we don’t plan to add new capacities yet, but we plan to grow our services on the range of capacities we have”.
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Source: Business Standard
