Container Market Seen Flourishing as Ship New-building Spree Continues

Ultra-large container ships expected to join booming trade with Far East, even as ocean carriers contend with slim profits, says Evergreen Marine Chairman Arnold Wang


Tianjin, China — November 5, 2007 — Barring unexpected disasters, the container market looks set to flourish in the years ahead, with China's economic boom continuing to drive growth in container transport and other industries, according to Arnold Wang, chairman of Evergreen Marine Corporation, who spoke at the World Shipping Summit (China) 2007 on November 2 in Tianjin.

In his presentation, titled "Growing Demand as Indicated by the Shipbuilding Order Book," Wang noted that over the past decade China's remarkable economic growth has brought structural changes to global container shipping and other related industries, including shipbuilding and terminal operations.

"In 2006 container throughput in all Chinese ports reached 80 million TEUs [twenty-foot equivalent units], or around one-fifth of the global volume," Wang told the audience at the conference. "For cargoes from Asia to Europe and North America, China's exports have accounted for more than half of market volumes. In 2006 China gained a market share of 65 percent in the Trans-Pacific eastbound trade, 71 percent with the inclusion of Hong Kong. In the Far East-Europe westbound market, a market share of 63 percent was recorded for exports from China alone and 72 percent with Hong Kong's contribution."

Wang added that given the scale of China's economic development, it is hardly surprising that China is now having a significant influence on the overall shape of global container transport and other related industries.

Prospects for Ship New-building

Turning to the subject of the global container ship new-building program, Wang continued: "According to Clarkson's statistics, shipyards worldwide are expected to churn out 1,410 thousand TEU of tonnage in 2007, while in the latest building spree, vessels above 10,000 TEU have increased by a notable extent. In total, ship owners have spent $51.2 billion on container vessels, including 114 vessels above 10,000 TEU. It is believed that more than 150 such ULCS [ultra-large container ships] will be added to order book by the end of this year."

BRS-Alphaliner's new-building statistics echo this development, said Wang: "The ULCS fleet above 10,000 TEU will grow from four to 152 ships in four years. All these gigantic vessels are expected to join the booming Far East-Europe trade."

Wang said that some people might start to wonder whether such a huge delivery of tonnage will cause oversupply and lead to market meltdown, or whether the influx of new capacity will only serve to fulfill ever increasing demand. He believes that in order to forecast market demand/supply, it is essential to analyze the growth in real slot capacity, which can be influenced by the following factors:

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