Improvement in container shipping but still cause for concern

The middle of 2016 was one of the worst periods of time ever encountered by the container shipping industry, several companies went bust, most notably Hanjin Shipping, and most companies were reporting record breaking losses. However, rates have improved marginally from the extreme lows seen over the middle of the year, but the entire container shipping industry remains under significant pressure. 
As most liner companies are now breaking even, with weaker lines still probably in a loss-making position, the situation is even worse for charter owners, with vessel earnings marooned below operating costs for most mid-sized vessel classes.
“Whilst the operator side of the liner industry continues to be wracked by convulsions and consolidation, the tonnage provider space seems to be slowly sinking ever deeper into the mire,” James Frew, Senior Analyst at MSI, said.
“Containership tonnage providers are at the bottom of the food chain, as ultimately liner companies can intermediate the supply of liner shipping capacity to shippers, and push excess capacity back onto the charter owners,” he added.
In the light of the current oversupply, and a demand environment which fluctuates between uncertain and disappointing, the industry is taking what evasive action it can on the supply side, according to MSI. September 2016 saw the second-highest monthly total ever for containership demolitions, while new orders were confined to just three ships totalling 6,000 TEU.

Source: WorldMaritimeNews

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