Mediterranean Shipping says trade slump to spur bigger ship use
Mediterranean Shipping Co., the world’s second-largest container line, said slowing global-trade growth and a prolonged industry slump will likely spur demand for bigger vessels and alliances among competitors, Bloomberg reports. Traffic on the route to Europe from Asia must shift to the biggest ships possible to stem losses, Vice President Diego Aponte said Dec. 5 in an interview. Even so, rates to carry 20- foot boxes will remain unprofitable as trade growth cools and a surplus of vessels persists until at least 2013, he said.
“Economies of scale are essential,” Aponte said by phone from Geneva. “Freight rates will be under pressure for many years to come.”
Slumping rates spurred Mediterranean Shipping to unveil an accord last week with CMA CGM SA, the container industry’s third-biggest company. A gauge of costs to ship the boxes to northwest Europe from Shanghai published by the Shanghai Shipping Exchange has plunged 64 percent this year.
“Volume growth is there, but it will never be explosive like it used to be in 2007,” said Aponte, whose father Gianluigi started closely held Mediterranean Shipping in 1970. Container lines without global reach won’t be able to survive in the future, according to the vice president.
463 Vessels
The company doubled the size of its fleet since 2004 and now owns and operates 463 ships calling at 335 ports worldwide. It will share vessels and space with Marseille, France-based CMA CGM as of February on global routes including the voyage to Europe from Asia, the industry’s second-biggest trade lane.
Demand to ship goods in containers will climb 2 percent in 2012 as the container fleet expands by 8 percent, Morgan Stanley Research estimated last month. Growth “isn’t as anticipated,” Aponte said.
“I don’t see the economy worldwide being very sparkling at the moment,” he said. “Volumes will grow because we are 18 million more people on the planet every year, but still it will not be enough to cover all the tonnage that we have at sea at the moment.”
The International Monetary Fund in September cut estimates for global growth this year and next. The U.S. economy will recover before Europe, according to Aponte. He’s optimistic that increasing trade between the so-called BRIC countries of Brazil, Russia, India and China may lift world expansion above 5 percent next year, compared with the IMF’s 4 percent projection.
Global container imports expanded 10 percent a year on average between 2002 and 2008 before contracting for the first time in 2009, according to data from Clarkson Research Services Ltd., a unit of the top global shipbroker. Fleet capacity doubled since 2005 in response to increased volumes, Clarkson data showed.
The industry may lose $2.5 billion to $3 billion this year, Philip Damas, director of liner shipping and supply chains at London-based Drewry Shipping Consultants Ltd., forecast in August.
“Economies of scale are essential,” Aponte said by phone from Geneva. “Freight rates will be under pressure for many years to come.”
Slumping rates spurred Mediterranean Shipping to unveil an accord last week with CMA CGM SA, the container industry’s third-biggest company. A gauge of costs to ship the boxes to northwest Europe from Shanghai published by the Shanghai Shipping Exchange has plunged 64 percent this year.
“Volume growth is there, but it will never be explosive like it used to be in 2007,” said Aponte, whose father Gianluigi started closely held Mediterranean Shipping in 1970. Container lines without global reach won’t be able to survive in the future, according to the vice president.
463 Vessels
The company doubled the size of its fleet since 2004 and now owns and operates 463 ships calling at 335 ports worldwide. It will share vessels and space with Marseille, France-based CMA CGM as of February on global routes including the voyage to Europe from Asia, the industry’s second-biggest trade lane.
Demand to ship goods in containers will climb 2 percent in 2012 as the container fleet expands by 8 percent, Morgan Stanley Research estimated last month. Growth “isn’t as anticipated,” Aponte said.
“I don’t see the economy worldwide being very sparkling at the moment,” he said. “Volumes will grow because we are 18 million more people on the planet every year, but still it will not be enough to cover all the tonnage that we have at sea at the moment.”
The International Monetary Fund in September cut estimates for global growth this year and next. The U.S. economy will recover before Europe, according to Aponte. He’s optimistic that increasing trade between the so-called BRIC countries of Brazil, Russia, India and China may lift world expansion above 5 percent next year, compared with the IMF’s 4 percent projection.
Global container imports expanded 10 percent a year on average between 2002 and 2008 before contracting for the first time in 2009, according to data from Clarkson Research Services Ltd., a unit of the top global shipbroker. Fleet capacity doubled since 2005 in response to increased volumes, Clarkson data showed.
The industry may lose $2.5 billion to $3 billion this year, Philip Damas, director of liner shipping and supply chains at London-based Drewry Shipping Consultants Ltd., forecast in August.