Container Market Will Balance in Two Years, Says Hapag-Lloyd Canada Chief

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Photo by: Jon Benjamin Photography

-Article by Linton Nightingale

Schoch: Volume growth is expected to be moderate at best, but capacity will grow only marginally and scrapping will continue.

Wolfgang Schoch sees signs that box shipping is finally moving in the right direction

HAPAG-Lloyd’s chief of operations in Canada has become the latest industry figurehead to point to light at the end of the tunnel for container shipping, but says it will be at least another two years before the market fundamentals are rebalanced and carriers start to regain their feet.

Speaking during the opening session of the Cargo Logistics Conference in Vancouver, managing director of Hapag-Lloyd Canada Wolfgang Schoch said that he expected the market to reach an equilibrium in 2019, when demand growth finally started to outstrip supply.

While he admitted that volume growth was still expected to be moderate at best, capacity would grow only marginally and scrapping would continue to close the gap between supply and demand.

Over the next two years an additional 3.2m teu of capacity is due on the water, which will continue to put pressure on the industry, but Mr Schoch does not expect lines to add to the orderbook substantially thereafter.

“Firstly, the shipping lines are not making money and the outlook for the global economy is not as good as before,” he said.

“Psychologically, when we were in 2007, lines were looking at the growth of the market and thinking, ‘Let’s order ships’. These days are gone.”

Furthermore, he said that industry consolidation would only start to be felt from 2018 onwards, which would also mean that lines no longer had a need to invest in ships.

In the case of Hapag-Lloyd, the German carrier will soon have access to United Arab Shipping Co’s fleet of ultra large containerships, while Maersk Line will have new capacity as a result of its Hamburg-Süd acquisition.

“And the same thing can be said for the other companies as they also have been subject to acquisitions and mergers,” he added.

“You do not have to go to the market to optimise your fleet, and even if you wanted to finance for buying new ships is also restricted, so you would struggle to raise the capital.”

Full article: Lloyd’s List, February 10, 2017

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