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Container shipping facing another two tough years

Container shipping facing another two tough years
The container shipping sector is set to face another two tough years as new vessel deliveries outstrip demand growth, according to industry executives.

“For the time being we are still in a situation where the fleet is growing a little bit faster than the transportation demand and that is why the freight rates are under pressure and also the charter rates are under pressure,” Jost Bergmann, DNV GL business director for containerships, told a seminar on Tuesday.

“There is still tough competition on the major routes due to oversupply and it’s expected to continue for one or two years.”

A similar picture was painted by Peter Malpas, director of Braemar ACM Shipbroking Australia, speaking at a seminar held by the Standard Club in Singapore. “What we are now seeing is the European problems are really now starting to hurt the container market,” he said.

On the demand side said they were now seeing some “modest, but noticeable” signs in container volume growth, with 5% growth this year and 6% forecast for 2015.

However, the problem is the supply side of the equation. “We are still delivering to many ships in the short term, that obviously creates that further expansion in supply curve, particularly in 2015." Newbuilding deliveries will be dominated by ultra large containerships destined for the Asia - Europe trade.

“It is going to be fairly subdued picture for the next two years or so with some signs of recovery thereafter.”