[290111.EN.SEA] Supply Side Fears Lead Carriers Back To Market Share Focus In 2011

SUPPLY and demand forecasts are now coming in thick and fast for 2011. And while actual growth, particularly on the demand side will be difficult to project this year, fears over surplus supply in the market are creeping into carrier thinking again, and market share unfortunately appears to be a focal point for the lines once again.  Despite the strong recovery in demand in the first three quarters of last year, figures for the fourth quarter reveal a significant slowdown, with vessel utilisation levels dipping slightly.  Average utilisation on the main trade lanes fell from 95-100 per cent between May and August 2010, when shippers were confronted with capacity constraints between the Far East and the west, to a projected 80-85 per cent in December, which although not bad, is evidently enough to make some carriers nervous. Growth rates slowed significantly in December. Shanghai, the world’s largest port, recorded a mild growth of 3.2 per cent, and Singapore, the second largest port, only 3.8 per cent in their latest monthly reports.  In October, Alphaliner estimated that the idle fleet would increase to 700,000 TEU as carriers were expected to lay capacity up in order to balance to forever see-sawing supply and demand situation.  However, as of January 2011, the idle capacity figure barely reached half of this estimate, with carriers seemingly unwilling to layup capacity in the winter months, thus resulting in a capacity surplus.  This is a scary development for the market, given that the most logical explanation for the carriers to act this way is that market share is again dominating the thinking of the shipping lines.  Further to this, carriers on the Asia-Europe trade announced they would delay their New Year rate increases of between US$250-$300 per TEU until March, as well as their proposed peak season surcharges of $320/400/450 per TEU, FEU and 40-foot high cube boxes, which were due to take effect on January 1.  Freight rates between Shanghai and north Europe dropped to $1,381 per TEU on January 7 from $1,401 the previous week, according to the Shanghai Containerised Freight Index (SCFI). Source : CSM, 18.01.11.