Container shipping hit the bottom in 2016 and is on the path to recovery, was the optimistic message from the carriers at the JOC’s annual TPM conference in Long Beach from February 28-March 1.
Liner executives emphasised this point at every opportunity, pointing to strong spot rates in the fourth quarter of 2016 that extended beyond the Chinese New Year holidays in late January. While the rates have fallen slowly but steadily since January 1, they remain double the levels recorded at the same time last year.
Yet the industry fundamentals have not changed, something that was starkly pointed out by Alphaliner’s Tan Hua Joo in a well-received address to TPM. He outlined in detail how the over-supply of container ships will remain the key challenge for 2017 and 2018; and carriers will need to continue their tight management of capacity, avoid chasing market share, and getting involved in a debilitating rate war.
TPM brought more than 2100 industry delegates together, around 40 percent of them shippers, just a month before the launching of the new container shipping alliances on April 1. There was great concern at the possible disruption this could cause as the carriers extricated themselves from their current alliances and began repositioning ships and preparing for the new services.
Another presentation that had the conference talking was from JOC senior economist Mario Moreno, who gave two scenarios of how 2017 would play out. In his pessimistic scenario, strained trade relations under the Trump administration would trigger a US recession, something that he gave a disturbingly high 25 percent likelihood. Moreno’s positive scenario was better received, although he only gave it a 15 percent probability. In this outlook, lower taxes and fewer regulations would see containerised imports into the US growing from 6.7 percent in 2017 to almost 9 percent by 2019.