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In
fact next year is slated to be a record
year for newbuilding deliveries with an
estimated 1.7 million TEU coming on stream.
But
slow steaming alone will not fix the ongoing
supply surplus in the market. Capacity withdrawal
will also be necessary, but it is far easier
said than done.
Some
carriers inevitably prove more proactive
than others when it comes to removing capacity.
One line may see the need of the market
and remove ships, while another will see
this as an opportunity to grab market share.
The
CMA CGM executives noted that the vessel
sharing agreements with other carriers may
help to resolve this problem to some extent
as liner partners can make decisions on
capacity withdrawals.
Of
course the lines must be mindful of upsetting
bureaucrats in Brussels that have worked
intensely over the years to limit the ability
of shipping lines to communicate with each
other on such decisions, but through these
partnerships with other carriers there is
at least some limited scope for dialogue,
the senior executive explained.
We
will look more into this issue later this
week.
But
despite the challenging market in Europe,
the news is not all bad for CMA CGM. The
line returned to profit in the second and
third quarters and Mr Saade is projecting
a full year profit of US$400 million¡Xan
unfathomable figure when one considers the
unfavourable market conditions this year.
For
CMA CGM the key to success in 2012 had been
the use of its mega ships, which helped
to reduce costs. The decision to partner
with other lines on key routes also proved
a big plus for the carrier's bottom line.
"We
feel that if you can do vessel sharing agreements
with others it will allow you to take advantage
of economies of scale and at the same time
share the risks," the senior executive
said.
Two
such partnerships the carrier is involved
in are with Maersk Line on the Asia-Mediterranean
trade and MSC on the Asia-North Europe trade.
"I
believe more and more that you will see
carriers joining forces. It is getting more
and more difficult to be alone if you still
want to stay alive. If you still want to
grow your business and take advantage of
economies of scale you need to find a partner
that shares some of your values and some
of your culture," he said.
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