World News
Box Ship Orderbook Needs to be Halved to Restore Supply and Demand Balance by 2019
According to experts, the world's containership orderbook will need to be cut in half if the industry wants to balance supply and demand by 2019, ShippingWatch reports.
Ulrik Sanders, global head of Boston Consulting Group's transport and logistics business, says tackling the current issue of overcapacity will mean slashing 300 newbuilds from the orderbook.
He notes that the number is both overly large and unrealistic, but that "the industry needs to think radically different in order to make a profit."
Sanders also said that the industry was generally being too optimistic about improving freight rates heading into 2019.
"We project a decline in freight rates of 1.6 to 2.6 percent, where others are pointing to growth," he said.
Adding to overcapacity concerns is the fact that a significant portion of the orderbook is devoted to mega-ships that are expected to help companies cut down on per-container costs.
"Looking at the current orders for new ships being placed now and in the past six months, we're looking at a incredible number of ships," he said.
"The industry as a whole does not need this, but if one looks at the individual carriers, they won't be able to survive without the big ships."
In recent years, companies have also begun turning to reducing fuel consumption and other efficiency-related measures to cut down on costs.
Sanders however, suggests that these initiatives alone won't be enough.
"The carriers need to deal with a scenario in which they have to improve their performance year after year," he says.
"Many of them are currently below break even, and they not only have to think about cutting costs, they also need to transform their business and ruthlessly target all costs."
Last month, it was reported that shipowners were hopeful that 2016 would bring increased demand and higher charter rates for containerships.
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 647.50 | 1.00 | 770.00 | 3.50 |
| Rotterdam | 601.50 | 2.50 | 754.00 | 2.00 |
| Houston | 619.00 | 11.50 | 795.50 | 3.00 |
| Fujairah | 651.50 | 1.00 | 895.00 | 2.00 |
| Global 20 Ports Average | 664.00 | 1.50 | 856.50 | 2.00 |
| Global 4 Ports Average | 630.00 | 3.00 | 803.50 | 2.50 |
| Global Average Bunker Price | 718.00 | 0.50 | 914.50 | 0.50 |
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