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Ocean Shipping Industry Struggles with Profitability Despite Record Volume, U.N. Survey Finds

Driven by rising domestic demand in China and by increased intra-Asian and so-called South-South trade, international seaborne trade performed relatively well in 2012, with volumes increasing by 4.3 percent, reaching 9.2 billion tons for the first time ever, according to the United Nations Conference on Trade and Development's Review of Maritime Transport 2013 reports.

World container port throughput also increased by an estimated 3.8 percent in 2012, to 601.8 million twenty-foot equivalent units (TEUs) in 2012. This growth was reflected in a strong port-finance sector as investors looked to infrastructure to provide long-term stable returns.

The 2012 increase in seaborne trade did not do much to boost the maritime shipping industry’s profitability, however, despite the fact that last year, for the first time in over a decade, the number of ships entering into service declined from the total of the previous year. The largest cycle of shipbuilding in history – the cargo capacity of the world fleet more than doubled between 2001 and January 2013 – finally began to slow, but even with fewer new ships, world tonnage capacity continued to climb in 2012, up by 6 percent over January 2012. That meant the prevailing oversupply of shipping capacity continued through 2012, says the report.

The steady delivery of new vessels into an already oversupplied market, coupled with the weak global economy, kept shipping rates under heavy pressure, the review says. The low freight rates that prevailed in 2012 reduced carriers’ earnings close to, and even below, operating costs, especially when bunker oil prices remained both high and volatile. Carriers applied various strategies to remedy the situation, in particular by taking steps to reduce fuel consumption.

Among other challenges facing the industry are energy security and costs, and related issues of climate change and environmental sustainability.

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