THE supply and demand gap in the container shipping sector is expected to widen in 2014, likely aggravating freight rate volatility and forcing carriers to step up cost-cutting measures.
Alphaliner predicts a three percentage point gap in 2014, resulting from projected supply growth of 7.6 per cent and demand growth of 4.6 per cent.
This compares to an expected 2.6 percentage point gap in 2013, according to Citi Research, resulting from anticipated 6.1 per cent supply growth and 3.5 per cent demand growth, reports Journal of Commerce.
Improving container volumes on East-West trades stemming from a steadily recovering US economy and a more stable European economy - already reflected in higher trans-Pacific and Asia-Europe volumes in the second half of last year - will be offset by a flood in capacity growth in the new year.
Clarksons predicts trans-Pacific growth in 2014 at 5.1 per cent, up from an estimated 3.4 per cent growth in 2013. In Asia-Europe, the UK shipbroker forecasts 5.7 per cent growth this year, compared to five per cent in 2013.
However, the ocean liners are unlikely to profit from this, at least in terms of seeing a more favourable supply-demand imbalance. "Though demand will improve, supply will likely continue to outpace demand growth," Citi Research said in a January 2 report.
The likelihood of global overcapacity continuing into 2014 will result in shipping lines deepening their push to cut costs, whether by expanding alliances so as to maximise utilisation of the largest and most cost-effective ships, by taking measures to make ships more fuel efficient or by reducing ships' time in port so as to maximise opportunities for slow steaming.
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