Container and Bulk Freight Ocean Shipping Capacity Spells Gloom for Investors

WORLDWIDE – Reports filtering out over the past few days emphasise that times for fleet owners and investors, particularly with regard to container vessels and bulk and general freight ships, are likely to remain in the doldrums for the foreseeable future. As has been reported repeatedly the size of the world’s fleet of merchant ships of all types has increased steadily as new builds come of the blocks following orders placed in the heady days prior to 2009.

Alphaliner, which tracks the progress of the ocean carriers, calculates that the overall carrying capacity globally has increased around 10% in the past twelve months and this has led to the downward spiral witnessed on indices like the Baltic Dry Index and container rates dropping off the chart, only to see the dramatic tariff increases and miscellaneous surcharges lately introduced by the box carriers in a bid to staunch the loss of blood.

With a build up of empty product tankers and the global container fleet standing at around 15 million TEU’s operators are juggling vessels to ensure maximum profitability but this can do little to minimise the problem and now it seems the problem is striking at the traditional heartland of vessel finance.

According to a Bloomberg survey the scheme whereby corporate investors can finance shipping without the burden of 15% taxation levied on other investments in Germany is fast disappearing. The report concludes that at least ten targeted funds have collapsed in the past two years causing thousands of investors to lose hundreds of millions of euros. Banks which have traditionally held large shipping portfolios now shy away, seeing no prospect of a decent profit in the future until freight tonnages and capacity equalise.

Photo: Slow steaming may have done much to remove the spectre of moored, empty fleets but has done little to remove the root cause of the problem of over capacity.