Hanjin's fall will not fix the global shipping industry's ills
By Nick Carey
CHICAGO (Reuters) - Following the collapse of Hanjin Shipping Co Ltd 117930.KS, container shipping rates from Asia to the United States spiked 50 percent as the carrier's customers scrambled for ships. Few shipping industry experts expect those price increases to fix what is wrong with the industry.
Hanjin's collapse and the resulting chaos in the global shipping sector are symptoms of deeper ills caused by a capacity glut that will remain even after the resolution of Hanjin's crisis, industry officials and experts told Reuters.
"All of Hanjin's ships aren't just going to sink overnight," said Clint Eisenhauer, vice president for external affairs at the South Carolina Port Authority. "We are going to see the same imbalance between supply and demand, and beyond a short-term spike the impact on rates shouldn't be dramatic."
In recent years container ship companies have gone on a spending spree, ordering ever larger vessels based on the assumption of rising trade in consumer goods from China and Asia.
Shipping industry data provider Alphaliner estimates fleet owners will increase container shipping capacity by 3.9 percent in 2016, even as estimates for global demand range from growth of just 1 percent to 3 percent.
According to order book figures from British shipping services firm Clarkson, the global container ship fleet should grow by 16.9 percent between now and 2019.
"These are significant investments that were based on what seemed reasonable forecasts at the time," said Dean Tracy, principal of consultancy Global Integrated Services and former import transportation director at Lowe's (LOW.N: Quote).
However, exports of goods and services as a percentage of global gross domestic product have slipped in recent years to 29.3 percent in 2015 from 30.7 percent in 2012, according to data compiled by the World Bank. Continued...