Economic growth won't save everyone
COMMENT: World trade is on a roll with growth not seen since 2010 and for a change it is synchronised across all major economies, writes Ben Hackett.
The World Bank forecasts global economic growth to edge up to 3.1% in 2018 after a much stronger-than-expected 2017, with the developing world leading the charge. Advanced economies which are operating at full or near capacity will grow well below this. Given this, global trade growth in liner goods can be expected to breach 5% this year with less growth in 2019. The US will be stronger and Europe weaker.
Given these forecasts, carriers are hanging on to the belief that their financial salvation is near to hand, but this may well be a false hope as capacity continues to outpace supply, even with push-back on the deliveries of new ships. The me-too syndrome is still alive and kicking as HMM have jumped on the big-ship bandwagon, ordering 22,000 teu containerships. More will surely follow, including for members of The Alliance as they cannot afford to be out of sync on unit costs as market share strategies come into play to fill empty slots.
Beneficial cargo owners will continue to reap the rewards of relatively low freight rates, but will have to tolerate the host of ancillary charges which are going up.
Terminal operators are in a most unenviable position as carriers expect them to cater for the ultra large fleet operating within the two of the large alliances. Terminal operators have not been successful in raising their fees in the face of the competitive pressures of dealing with fewer, but substantially larger customers. Those “benefitting” from increasing transhipment operations will see declining net revenues alongside capacity pressures.
The winners in all this will most likely be the large third-party logistics companies that can benefit from the supply chain services that they offer as well as the overland transport operators of trucks and rail.
Finally, the industry needs to recognise that China is becoming the dominant player, replacing the Europeans, on the seas as well as at the ports with its massive investments in ships and terminals. Frankly, it's hard to compete with state-owned enterprises.
LATEST PRESS RELEASES
In 2016 we were awarded with the supply of fender systems for the entire new port of Turkmenistan's ... Read more
SOGET and Microsoft: a strategic partnership for a secure digitization of ports in France and worldwide
SOGET, world specialist in Port Community Systems (PCS), and Microsoft, world leader in technology, ... Read more
The new Echoscope® 4G Performance Pack Upgrade presents an opportunity for our existing customers to... Read more
Coda Octopus Products Selected to Collaborate on One of Five Premier Scottish-Japanese "Joint Ocean Innovation" Strategic Subsea Projects
The Nippon Foundation and Scottish Enterprise R&D Program provides funding of up to $32 million over... Read more
ShibataFenderTeam permanently sustains and develops its agent network. Read more