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            july 24, 2019

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Container shipping heading for better future, says analyst


Chief executive officer of Sea Intelligence Consulting, Lars Jensen, says while many conferences he has attended in recent months "revolve around how miserable everything is" in container shipping, he thinks the industry is "headed into a better future."
As the final speaker at TPM19, a conference sponsored by the Journal of Commerce that focuses on transpacific container shipping and logistics, Mr Jensen stressed that while individual carriers and freight forwarders may be under threat, he said the industry is not.
"This is a vibrant industry which is going to continue to provide good opportunities," he said.
He said while the industry still has an overcapacity of supply, it is "slowly climbing out of that hole. The bottom was in 2016 and markets are getting better. A balance between supply and demand is a couple of years out."
Because of overcapacity, carriers are increasing the amount of transshipment they perform, offering fewer weekly services, and increasing the number of "blank sailings" in which a regular weekly service is cancelled, he said.
The growth in the size of ships, which carriers have embraced as a way of lowering costs with economies of scale, is another factor that has increased the amount of transshipment as carriers need more containers to fill the bigger ships and driven the decision by carrier to form alliances.
While carriers will see fuel prices spike later this year when the International Maritime Organization agreement that carriers use low-sulphur fuel takes effect on January 1, 2020, Mr Jensen saw this as an issue the industry and shippers will take in stride.
Mr Jensen also took the opportunity to dispel what he sees as myths that are distracting the industry from strategic thinking, including the issue of carriers colluding. "Carriers have been loss-making for a decade. If this is what happens when they collude, then let them collude." Mr Jensen believes that consolidation among container carrier will continue.

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