Drewry Shipping Consultants, announced that its latest report, “Annual Container Market Review and Forecast 2003/04” highlights that despite economic uncertainty, the war in Iraq and the outbreak of the SARS virus, 2003 will be a good year for liner shipping companies as trade volumes, especially to and from China, register strong growth.
The report reports how this year has seen a further recovery in the liner shipping industry as the cargo volume surges experienced in headhaul trades out of Asia in 2002 continued into the first half of 2003. What is more, these containers are being carried at significantly higher freight rates than last year, with Drewry Shipping Consultants projecting total gross carrier income of a record US$106 billion in 2003, up more than 19 percent on last year.
With world container trade expected to grow 11 percent this year and 9 percent in 2004 and the supply of new slots (effective capacity) rising by 10.3 percent and 8.8 percent, respectively, vessel utilization levels are forecast to remain high over the next two years (see Table 1). This should enable further rate restoration programs to be implemented, with carriers, potentially at least, entering a period of sustained profitability.
Forecast global supply/demand balances and average revenue/teu
Source: Drewry Shipping Consultants Ltd
Daily charter rates, which for the ships of 1,500 teu and above are more than 50% up on the beginning of 2003, will also remain firm, while a pick-up in second hand values is also expected.
These are just some of the findings from Drewry’s Annual Container Market Review & Forecast 2003/04, which was published in late September.
It is not, however, all good news
as the liner companies have faced rising box imbalances in the transpacific, Europe/Far East/Europe and transatlantic trades and this has raised their operating costs considerably. The shipment of empty equipment into Australia and East Coast South America has also grown sharply, with over 21% of global container-handling activity comprising empty units.
And despite the increase in freight rates, prices are still lower than they were in 2000 on most trade lanes.
In spite of this, Drewry’s report indicates that the future does appear brighter with many ocean carriers having already seen a return to profitability and are in the midst of ambitious investment/expansion programmes.
‘Given the optimism in the industry and the positive prospects for the future, newbuild contracting in the first six months of 2003 soared, with close to 700,000 teu of slots newly ordered with the world’s shipyards,’ says the report’s editor John Fossey. ‘By the end of September, this figure had increased to more than one million teu slots, an all time record, with shipyard berthing availability for large post-Panamax ships full well into 2006.’
Currently, the orderbook (an estimated two million teu slots) for cellular tonnage is equivalent to almost 30% of the existing fleet in service, with the post-Panamax sector accounting for just under 50% of the total backlog.
In addition to the regular five-year demand, supply and pricing reviews and forecasts, Drewry’s Annual Container Market Review and Forecast 2003/04, provides detailed analyses of the main East/West and North/South trades, plus extensive coverage of the sale and purchase and demolition markets. In addition, the report has separate analytical features on freight rate forecasting, ownership control of the fleet and the super-generation post-Panamax ship concept.