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Friday, June 5, 2020

Maritime Logistics Professional

What are you going to Believe...

Posted to Martin Rushmere (by on January 20, 2011

...Facts or what I'm Telling you?

Market manipulation is not only the preserve of container lines, but of analysts and forecasters as well. In a case of “everyone’s marching out of step except Harry,” China analytical agencies have come out with a 2011-2012 assessment that flies in the face of what is actually happening.

But more than that, the trade and maritime news service publishing the forecast seems to endorse the findings without question.

“ANALYSTS are now projecting that there will be yet another container shortage in 2011, as more positive news emerges as to the overall state of the container shipping industry this year”, says the report on two China forecasts, by GF Securities and China International Capital Corporation.

“And the good news does not stop there,” says the report, “with many analysts and industry watchers now forecasting a balanced, if slightly undertonnaged, container shipping sector over the next two years at least. The analysts believe that supply and demand will remain relatively balanced throughout 2011, even if vessels that are now traveling at extra slow steaming speeds were to speed up to normal steaming, while in 2012 we should see a ‘mild supply shortage’ “.

The assessment from China International Capital Corporation says that vessel supply “will grow by 7.7 per cent year on year in 2011, and 7.5 per cent in 2012, while demand will grow by 9.9 per cent and 10.5 per cent respectively over the next two years.”

GF Securities’ says supply will rise at 8.2 per cent and 8.4 per cent in 2011 and 2012, while demand is expected to rise by 11.8 per cent and 12.7 per cent, respectively, based on the IMF’s (International Monetary Fund) global GDP forecasts for the coming two years.

Contrast that with other industry projections, which reckon there has already been a slowdown. An example is Alphaliner, which says there will be overcapacity for at least another year – the global fleet will expand by 8.7 percent over the next two years, while demand will fall below 8 percent this year, compared with 13.6 percent in 2010. Alphaliner reckons vessel utilization rates have fallen to 80 percent on the Far East to US and Europe routes.

Evidence that Alphaliner’s view is probably more correct is given by the Shanghai Containerised Freight Index, which has slipped at the wrong time of the year.

Of course, everything could be distorted by the Chinese New Year and GF and CICC could be right.