Containership sector face 'overcapacity Crisis': Wall Street Journal

Oct.14--LONDON's Drewry Shipping Consultants' report cut its forecast for the industry's growth this year to 2.2 per cent from twice that in an earlier projection, while fleet capacity is expected to grow 7.7 per cent. 


Drewry analyst Neil Dekker said "an overcapacity crisis" will grow as more ultra-large container ships enter fleets in the next few months.

Ocean shipping capacity is expected to expand by 1.6 million TEU by the end of this year. Mr Dekker said ocean shipping companies won't be able to keep rates from sliding if they don't idle more ships.

The new Drewry report is one of several that are raising alarms about the financial state of ocean carriers as they continue to incorporate new vessels that are some 40 per cent larger than the biggest ships were less than 10 years ago. 

The scale of the megaships has led many large shipping lines to combine services under what the industry calls alliances. Some of those groups have recently cut back services, a costly move for shipowners that need a steady stream of revenue to pay for the new vessels.

(Source:Wall Street Journal)

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