The shipping industry will continue to face the same challenges in 2012

Carriers will want to forget 2011 quickly, says the latest 4Q11 forecast from Drewry. Based on the previous quarter’s financials and year-end industry dynamics, the UK firm foresees that the industry could lose as much as US$5.2 billion, despite a projected global container growth of 6.5%.

The same problems faced in 2011 will continue on for the New Year: overcapacity, poor headhaul growth on the major east-west routes and the continued fight for market share amongst the lead players ensured that spot rates eroded by more than 50% on the key headhaul routes by the end of last year.

Drewry’s report highlights that even attempts by carriers to cull capacity during November and December did not act as a catalyst to lift rates by any meaningful margin. Spot rates have slightly improved as of early January, but this is still likely to be a temporary phenomenon driven by the annual spike before Chinese New Year.

Strategies to deal with poor growth

But the industry’s top players are looking for ways to beat the difficult scenario 2011 has left for 2012. The report reads that the biggest industry driver now is to place the largest ships in every major trade, to ensure that carriers or alliances remain competitive on slot costs. According to Drewry, this has caused a major shift in the network configuration for the Asia-Europe trade whereby a number of carriers clubbed together to share costs and ships and to provide shippers with an alternative services. The service structures will be finalized by April, although many carriers will continue to receive big ships throughout the rest of this year, providing an extremely difficult environment for small players with sub 8,000 TEU ships to survive in.

Drewry believes that the global fleet above 8,000 TEU will expand by 25% this year, presenting a severe challenge for the industry to absorb, as the company foresees demand growth only in the emerging markets of Latin America, Indian Subcontinent, Africa and intra-Asia where sub-8,000 TEU ships operate. Overall global demand growth for 2012 is forecasted at 5.4%, according to the report.

By MundoMaritimo