Dynamar report highlights capacity spiral

News 29 Dec 2014 by WCN Editorial

Alkmaar (Netherlands)-based Dynamar’s latest report on the world’s leading container operating companies points to over capacity as being the “root cause” for the industry’s problems and poor record on profitability.

𝕏

“Cost reduction, in the form of deploying ever-larger less fuel consuming and more efficient ships has been the answer of many of the top 25 container liner operators to their constantly declining revenues,” wrote the analysts. “But under the stagnating markets, as has been the case for a number of years now, the paradox is that this growing fleet of increasingly bigger leviathans exacerbates overcapacity and this has a detrimental effect on rate levels, inducing a further need for cost reduction …. and there we go again!"

Analysing financial results for the leading lines, Dynamar’s research revealed that over the past five years, this group of carriers had posted a profit in only one annual period and that was in 2010. In all other years net losses had been recorded, collectively totally over US$12.5B between 2009 and 2013, and equivalent to a loss of US$28 for each full container moved.

The picture is little changed over a longer 10-year time horizon, with Dynamar claiming that since 2005, the slot capacity of the top 25 carriers had grown 35% faster than their carryings. And there is little hope of things changing in the future according to the specialist maritime research and consultancy group.

“The almost excessive number of ultra large container ships planned for 2016 delivery is sending shivers through the industry,” said the analysts. “There are 65 ships having a capacity of nearly one million TEU which is equal to a share of 5.4% of the existing container vessel fleet on order. A lot of economic recovery over the next two years will be required to digest them all.”