Box eaters

Global container shipping is to see “price wars” amid market consolidation by larger players while Russia suffers from dumping despite the country’s high potential for cargo containerization. 

Age of giants

Container shipping market will see price wars and dumping in 2014-15, Kirill Tyulenev, Managing Director of United Arab Shipping Company Agency said at the Conference “Logistics of Container Transportation” in Saint-Petersburg.

According to him, the demand for transportation will grow by 4.4% while the proposal will see a 5.5-pct growth which is a considerable difference for a global market. 

Kirill Tyulenev was supported by Aleksey Kletsko, Vice President of Strategy and Special Projects of FESCO Group. He said ship owners are highly encouraged to order new vessels with higher capacity and efficiency but they are not eager to dispose of old vessels. Aleksey Kletsko estimates present excess of container carriers’ tonnage at 10-15%.

In fact, large players invest a lot today into the construction of new container carriers with higher capacity and efficiency. 18,000-TEU Triple-E series being built to the order of Maersk is a strong example of this.  

Kirill Tyulenev also forecasts further consolidation of alliances operating container lines for the reduction of the operating costs and diversification of services.

Finally, the expert believes, the situation will stabilize by 2016. The market will be abandoned by the players which have not invested into the construction of larger and more efficient vessels. Part of smaller container carriers will be used at short sea and feeder services.

However, there is a risk of insufficient loading of giant container carriers. In this case, investments into their construction will not be repaid. All the participants of the logistic process will have to integrate for consolidation and synchronization of cargo flows. In case of global economic recession, only holdings with highly diversified business will be able to survive.

Challenged by dumping and low containerization

When speaking about the marine container shipping in Russia, Aleksey Kletsko says it is challenged by the dumping problems associated with credit scheming. According to him, the rates of certain companies are 10-15% lower as compared with those of the market leaders. Such not-publically accountable companies with complicated legal structure live on bank loans and go bankrupt from time to time.  Such activities undermine the stability of the Russia market and threaten the interests of shippers.

Meanwhile, Russia has a great potential of export cargo containerization, Eva Baller, Sea Freight Director at Kuehne-Nagel, says. According to her, the following cargoes have the highest containerization potential: aluminum, polypropylene, fish-flour, soot and some types of cement.

Containerization of export cargoes will ensure return load of containers and improve efficiency of supply chains.

Vitaly Chernov