That is how Stefan Verberckmoes, shipping analyst and editor for North Europe at research group Alphaliner, views the current state of the liner shipping industry.
In a key note address at Intermodal Europe 2018 in Rotterdam, he said that while 2019 would see an improvement in the sector’s supply/demand balance it would not be until 2020 that all excess slots will have been absorbed and that operating margins would pick up.
“Carriers are losing money and operating margins have been negative throughout 2018 with overcapacity the main reason for this.” said Verberckmoes. “Year-on year (up to October 2018), our data reveals that the fleet grew by 6% to 22.2M TEU with 579,666 TEU currently idled.
“The orders backlog is 2.9M TEU, which is equivalent to 13% of existing slot capacity. We expect 874,000 TEU of this to be delivered in 2019 with capacity in vessels loading 10,000 TEU and above set to increase by 11%. That will be in excess of projected trade growth and this will slow the recovery.”
The analyst also pointed to the growing imbalance within the fleet and the ongoing disruption caused by the introduction of megamax ships. “Over 38% of the orderbook comprises megamax tonnage for the Asia/Europe route, a trade which posted growth of just 0.1% in the first eight months of 2018, explained Verberckmoes.
“As every new entrant pushes another ship into another trade, we expect the cascading of large 9,000/10.000 TEU ships into secondary east-west and north-south routes to have a major impact on margins in 2019. Meanwhile, medium-sized shipping lines without mega ships will be further squeezed.