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Published: 18 May 2017      

Capacity reduction is the best answer to liner industry’s problems

One of Germany's largest shipowners tells liner conference digitalisation will not save the industry from its number one problem.

Delegates and speakers attending the Global Liner Shipping conference held in Hamburg earlier this week spent several sessions debating how digitalisation and the use of new technologies could raise productivity levels, cut costs and reshape processes. While clear benefits can be achieved from their use, fundamentally, it seems the best solutions to solving the container shipping industry’s current problems are cutting overcapacity and closer engagement with customers. Historically, it has always been like this.

“I am absolutely convinced that digitalisation is not the solution and I also believe the current problems have little to do with the financial crisis,” said Hermann Klein, chief operating officer of Claus-Peter Offen, one of Germany’s largest ship owners. “It’s entirely due to the huge over-supply of capacity and while ships can be laid up and scrapped to bring the supply/demand balance more into line, who is going to scrap the shipyards.”

James Frew, a senior analyst at UK-based Maritime Strategies, agreed. He pointed to the rapid expansion of shipbuilding berths in China in the past 10-15 years and stressed that “shipyard capacity was the ‘elephant in the room’. “When it comes to container shipping's recovery prospects these could prove ‘stillborn’ if ordering activity picks up,” he said.
While also sharing concerns over ocean carriers returning to yards and ordering new tonnage, Drewry Maritime Advisors’s director of container research Neil Dekker, stressed that the biggest challenge currently was managing cascading properly.
He said: “Our research shows that 68 ships of about 13,500 TEU will need to be repositioned from the Asia/Europe/Asia trade over the next four years or so to make room for ULCV tonnage. This is an acid test for carriers and they have to get it right if a sustainable supply/demand balance in the industry is to be achieved.” 

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