Executive Briefings

Bigger Ships Are On the Way-But Don't Expect a Glut of Container Tonnage, Evergreen Chairman Says

If anybody doubts China's growing dominance in international trade, take a look at the statistics offered recently by Arnold Wang, chairman of Taiwan's Evergreen Marine Corp. In 2006, container throughput at Chinese ports reached 80 million twenty-foot equivalent units (TEUs), accounting for a fifth of global volumes, Wang said at the recent World Shipping Summit in Tianjin. Chinese exports accounted for more than half of all cargoes moving from Asia to Europe and North America. In the trans-Pacific eastbound trade, China enjoyed a 65-percent market share-71 percent when Hong Kong is included.

All of that activity is having a dramatic effect on global container shipping. Ocean carriers are rushing to build new and bigger ships to handle the growth in demand generated by China's booming economy. Quoting figures from Clarkson Research Services Ltd., Wang noted that shipyards around the world are expected to turn out 1.4 million additional TEUs of tonnage in 2007, with a marked increase in the number of vessels over 10,000 TEUs. More than 150 of the so-called ultra-large containerships (ULCSs) will be added to orderbooks by the end of this year, he said.

Will this influx of bigger ships result in overcapacity and a "market meltdown"? Wang doesn't seem to think so. He said the loading requirements for special cargoes reduce the actual capacity of containerships, so that TEU totals tend to be overstated. Other factors that should hold down overall volume growth on long-haul routes include the scrapping of older vessels, port and infrastructure constraints, and the need for more feeder services, Wang said. Forecasts of global economic expansion suggest that "cargo volumes will continue with stable growth while the tonnage supply will increase slower than expected," he said. "Therefore, it is believed that the container shipping market will continue to flourish unless the global economy is impacted by unexpected catastrophes."

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If anybody doubts China's growing dominance in international trade, take a look at the statistics offered recently by Arnold Wang, chairman of Taiwan's Evergreen Marine Corp. In 2006, container throughput at Chinese ports reached 80 million twenty-foot equivalent units (TEUs), accounting for a fifth of global volumes, Wang said at the recent World Shipping Summit in Tianjin. Chinese exports accounted for more than half of all cargoes moving from Asia to Europe and North America. In the trans-Pacific eastbound trade, China enjoyed a 65-percent market share-71 percent when Hong Kong is included.

All of that activity is having a dramatic effect on global container shipping. Ocean carriers are rushing to build new and bigger ships to handle the growth in demand generated by China's booming economy. Quoting figures from Clarkson Research Services Ltd., Wang noted that shipyards around the world are expected to turn out 1.4 million additional TEUs of tonnage in 2007, with a marked increase in the number of vessels over 10,000 TEUs. More than 150 of the so-called ultra-large containerships (ULCSs) will be added to orderbooks by the end of this year, he said.

Will this influx of bigger ships result in overcapacity and a "market meltdown"? Wang doesn't seem to think so. He said the loading requirements for special cargoes reduce the actual capacity of containerships, so that TEU totals tend to be overstated. Other factors that should hold down overall volume growth on long-haul routes include the scrapping of older vessels, port and infrastructure constraints, and the need for more feeder services, Wang said. Forecasts of global economic expansion suggest that "cargo volumes will continue with stable growth while the tonnage supply will increase slower than expected," he said. "Therefore, it is believed that the container shipping market will continue to flourish unless the global economy is impacted by unexpected catastrophes."

Visit www.evergreen-marine.co