Global shipping industry in danger of decline

By Freddie Pierce
Follow @JosephWilkesWDM To read the latest issue of Supply Chain Digital click here A report into the global shipping industry has been released today...

To read the latest issue of Supply Chain Digital click here

A report into the global shipping industry has been released today, warning of decline.

Online market research store Research and Markets has released the Global Shipping Industry 2013 – Forecast, Trends and Opportunities, report from Taiyou Research company, which provides analysis and overview of the entire industry as well as individual elements such as ownership and prices.

The report states that in the coming years, the global shipping industry is expected to decline by five to 10 percent.

Oversupply and high bunker oil prices will eventually lead to a constraining of performance.

The report said: “A sustained oversupply of vessels combined with high bunker oil prices will pressure margins in most shipping segments. The dry-bulk and crude oil tanker segments are likely to have the largest supply-demand gap in 2013, complicating these sectors' ability to meaningfully improve their earnings.

“The tanker market has also been affected by the oversupply of vessels in the near term aided by lower OPEC production levels; though the outlook for the product tanker segment is more favorable since demand growth is likely to outpace supply during 2013, leading freight rates to rise by the end of this year. Box freight rates for the container segment have rebounded since March this year.

“However, strong improvement in earnings should not be expected for the full year in this segment. This reflects sustained high bunker oil costs and pressure on container rates stemming from recent increases in deployed tonnage of box ships.”

But Japanese conglomerates could be affected to a lesser extent by the negative market trends that will damage other global shipping trends. This is due to the scale of the Japanese conglomerates, their diversification, (including their liquefied natural gas, or LNG, fleets) and strong relationships with customers, said the report.

The report includes analysis of 35 major shipping companies such as AP Moller Maersk, China COSCO, China Shipping Development, D/S Norden, Golar LNG, Kawasaki Kisen, Hyundai Merchant Marine.

AP Moller Maersk, Nippon Yusen, Kawasaki Kisen, Mitsui OSK Lines, China COSCO and Evergreen Marine are some of the top players in the industry, the report suggested.

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