The container shipping market will continue to see positive signs of recovery in the coming months due to improved demand, top executives at two liner companies told delegates attending the TPM Asia conference in Shenzhen today.
Nicolas Sartini, CEO of APL, noted his company’s interims this year were their best result since the second half of 2010. He felt container shipping was enjoying a more favourable market with volumes growing and greater discipline on display among the leading carriers.
“We have seen much more solid demand from Asia-Europe routes comparing with 2016 and demand from intra-Asia markets are growing steadily,” Sartini said and he predicted the demand in 2018 will continue to be strong and the company will continue to make investments in Asia.
According to Sartini, intra-Asia container volume now accounts for one sixth of all containers moved.
Jeremy Nixon, global CEO of Ocean Network Express (ONE), the merged container company of Japan’s MOL, K Line and NYK, agreed with Sartini on the optimistic market demand outlook.
“The Latin America market is showing good momentum and Europe is recovering, we are seeing much more encouraging demand,” Nixon said.
Both APL and ONE have experienced a consolidation via mergers and acquisitions lately. APL was acquired by French liner CMA CGM last year while ONE is still undergoing a merger process among the three Japanese major liners with scheduled commencement of operations in April 2018.
“Creating a new brand allows us to take a step back but in the meantime to look into the future,” Nixon said.
Talking about the challenges in the market, Nixon reckoned the main issue for liners is to manage the volatility in supply and demand. There will be more differentiations in terms of strategies between carriers in the next two to three years, he predicted.
Alan McTaggart, group logistics director at Techtronic Industries, held a different opinion from Sartini and Nixon, giving the audience a shipper’s viewpoint. Volatility and consolidation in the container shipping space is creating more challenges for BCOs, McTaggart said.
“We will continue to face volatility in rates in the near future. There is still overcapacity and too many interests in the market operating without discipline,” he said. “The main challenge for carriers is to provide more customer services, not supply and demand.”
ONE’s Nixon reckoned the consolidation in the container sector is a necessity to help rebalance the industry. However, he revealed he was not a fan of mega ships. “Personally I’m not convinced about the mega ships, they are not universal types of products that you can just put into the trade lanes until the port capacity is sorted out and feedering and trucking connections work smoothly.
It’s more about finding the right ship size that equally match the whole supply chain,” Nixon said.