Containerships: A Dynamic Sector in Motion

It seems as if all the players who are involved in the containership market are so absorbed in building and chartering new ships that no one considers the potential consequences that oversupply would have on this sector of the shipping industry. Is it reality, though, or wishful thinking that demand will keep growing at a pace such that oversupply conditions will not occur, at least in the near future? It is true that containerized trade increases rapidly as international trade increases, but supply is building up at the same time as well. Inevitably, at some point, supply will exceed demand and everyone with fundamental economic knowledge knows what happens then. The question is: “How soon will this happen?” The most optimistic believe that such a situation will not present itself soon and that only minor adjustments will take place when it happens. On the other hand, the pessimists foresee a collapse of the charter rates that will lead to a major shake up of the industry. Almost everyone agrees, though, that whatever the developments, rates for containerships of different size and age will be affected in different ways and degrees, with the larger and younger containerships retaining a privileged position. The same is true for liner companies of different size. The bigger players are in a much better position to withstand adverse market conditions. In addition, they take preemptive steps to hedge against a downturn in the market. The smaller liner companies have already been limited to a niche player role and are expected to have much more difficulty in coping with oversupply conditions.

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