Container shipping supply and demand will remain “highly volatile” for the next three or four years before possibly settling into a more standard cyclical pattern, according to Seaintel Maritime Analysis.
The Copenhagen-based firm cited larger vessels, carriers’ ordering habits, declining trade imbalances, vessel layups, inventory corrections, cascading of large ships onto lower-volume services and near-sourcing that reduces container-miles.
“These factors pull in different directions but with significant strength” and “point toward very volatile markets in the coming years,” Seaintel said in its weekly bulletin.
Annual growth in container shipping demand is likely to be less than the 8 percent to 9 percent of recent years, the report said. Most breakbulk cargoes suitable for containerization have already made the switch.
Meanwhile, shifting trade patterns have reduced growth in the average distance containers are shipped to 1 percent from the 2 percent growth of recent years.
The supply-demand balance also will be affected by reduced trade imbalances now that outsourcing from North America and Europe has peaked, Seaintel argues. Carriers size their fleets based on the dominant leg of a trade route but “we are in a period now where headhauls are no longer automatically out-growing backhauls.”
“The gradual shifts in sailing distances and trade imbalances imply that the usual rules of thumb as to how much capacity the market can absorb in a year will have to be adjusted,” Seaintel said. “If capacity is ordered based on the same ordering patterns as in the past 30 years, it is highly likely that too much capacity will be ordered, laying the foundation for a sharp downturn in the market.”