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The
first is the uncertain macroeconomic and
geopolitical environment. The second is
a result of the upsizing efforts of carriers
to acquire larger and larger vessels, which
has had a profound impact on the market's
supply and demand fundamentals.
Lastly,
the group's analysts argue that a change
in the market behaviour of carriers is also
to blame.
Due
to these reasons, Drewry also believes that
freight rate volatility will continue to
feature as a staple of the container shipping
industry going forward.
This
is a fact that is hard to argue with. Just
recently Hong Kong Shipping Gazette spoke
with SeaIntel Maritime Intelligence senior
consultant Thorsten Boeck, who told us he
believed that the average cycle times of
the industry were getting shorter and shorter.
Mr
Boeck said that when he first came into
the shipping industry the cycles occurred
over a seven-year period. In recent years
these cycles have shorted to three years,
then two years and now even shorter.
"In
2012 alone we saw a peak and a bottom. We
believe that the volatility is driven by
overcapacity and as this gap widens in the
coming years, we see that those cycles will
become even shorter. Perhaps we will start
having two peaks within the same year in
2013," he said.
It
is difficult to imagine that the industry
can continue indefinitely like this, as
it may prove far too turbulent not just
for the service provides, but their customers
as well.
We
can already see now with the most recent
round of rate increase announcements on
the Asia-Europe trade that some carriers
are already trying to undercut their competitors,
which could result in yet another rate war.
The
sad fact of the matter is this. Some shipping
lines can afford to suffer losses more than
others. And it may be all too tempting for
these lines to try and price their competitors
out of the market, particularly those lines
that have already been able to reduce their
average unit costs through the acquisition
of larger vessels.
Given
the increasing volatility in the industry
with regards to freight rates, particularly
on the main line trades, the temptation
to reduce competition in the longer term
may be all too attractive for some.
One
would hope that it does not come to that.
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