Oversupply looms over the horizon

The shipping industry could face shaky waters if demand lags amidst entry of new and bigger vessels.

Phillip Securities Research noted:

There is a significant amount of container vessel deliveries over the next few years. According to data compiled by industry consultant, Alphaliner, the top 20 container shipping companies have an average order to capacity ratio of 30%. While this is not excessive as compared to the pre-crisis shipbuilding boom of close to 60%, some important trends can be observed that would shape the industry dynamics over the next few years. The new vessels to be introduced will be bigger in size and are on average >9000 TEU each. Due to the large size of these vessels, it is likely that majority of them would be introduced to the Asia-Europe route. With significant capacity to be introduced, the shipping industry could face a potential oversupply situation if demand does not keep pace with the supply growth. NOL’s shipping subsidiary, APL, has the highest order to capacity ratio among the major players.
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