Tags: container | ships | order | scale

Container Firms Order New Ships to Gain Economies of Scale

Tuesday, 03 Dec 2013 09:29 AM

Global container shipping companies have a strong appetite for new vessels, despite existing overcapacity, because they want to trade up to larger ships to benefit from economies of scale, according to shipping analysts.

Shipping association Bimco expects total container shipping fleet capacity to grow by 5.9 percent in 2013, although estimates for the amount of container capacity being scrapped are at a record high.

"Despite the challenge they face, the second tier carriers continue to have a strong appetite for new capacity," shipping newsletter Alphaliner wrote on Tuesday.

Ordering new ships is aimed at lower operating costs to match economies of scale enjoyed by the largest carriers with the biggest vessels.

Alphaliner said the order book of the three largest carriers, Maersk Line, part of Danish conglomerate A.P. Moller-Maersk, Switzerland's Mediterranean Shipping Company and France's CMA CGM, currently stands at 15.6 percent of their current fleet.

The combined order book of the next 18 carriers has reached 19.8 percent of their existing fleet.

Nine of 17 carriers reported positive operating earnings in the third quarter, but performances of individual carriers were mixed and operating profit or loss ranged from minus 5.1 percent for Regional Container Lines to plus 8.1 percent for Maersk Line.

"The largest carriers continue to enjoy significant scale advantages, with Maersk and CMA CGM, the first and third largest carriers, continuing to outperform the rest of the industry," Alphaliner said.

The container shipping industry has been struggling with overcapacity because of too many vessels and too few goods to transport as a result of the economic downturn.

© 2017 Thomson/Reuters. All rights reserved.

   
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Global container shipping companies have a strong appetite for new vessels, despite existing overcapacity, because they want to trade up to larger ships to benefit from economies of scale, according to shipping analysts.
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2013-29-03
Tuesday, 03 Dec 2013 09:29 AM
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