Container Shipping Quarterly

Special Report

Strong demand , increased scrapping will curb overcapacity : Maersk CEO

By Greg Knowler

Ocean carriers are on track to nearly double profit levels this year , and despite a wide supply-demand imbalance through 2025 , there are increasing signs that fears of excess capacity have been overblown , according to Maersk CEO Vincent Clerc .

Carriers will sail into 2025 facing capacity growth of 9 % against volume growth of approximately 3 %, according to data from Journal of Commerce parent company S & P Global . A similar supply-demand imbalance existed late last year , and carriers were expecting the excess capacity to have a devastating impact on rate levels until the Red Sea diversions absorbed surplus supply , while strong demand filled all available ships at highly elevated rate levels .

“ Demand is significantly stronger , so unless you expect that to reverse ..., the whole base has also moved .”

Shipping association BIMCO has forecast cargo volume would grow between 4 % and 5 % this year against a 16 % increase in capacity .

Even if the traditional shorter route via the Suez Canal is again viable in 2025 and all the absorbed capacity is released back into the market , the supply-demand imbalance will not be as dire as expected , according to the Maersk executive .

In an Oct . 31 third-quarter earnings call , Clerc outlined a series of factors that are bending the capacity curve back in favor of the carriers and will lead to an improved supply-demand balance next year despite the large capacity overhang .

“ Demand is significantly stronger , so unless you expect that to reverse and go to negative growth , the whole base has also moved ,” he said . “ The fact that there is no sign of an inventory correction or a sharp decrease around the corner is maybe more optimistic than it was a year ago .” With ocean networks now all sailing at full speed , Clerc said significant cost , fuel consumption and environmental benefits would come from slowing down vessels .

65 Focus Photography / Shutterstock . com

18 Journal of Commerce | November 18 , 2024 www . joc . com