The container shipping sector is expected to face strong challenges in the next two to three years as ship supply overwhelms demand, the head of the world's second-largest container shipping company said on Monday.
"Shipping rates are pressured by the high ship supply," Nicola Arena, chairman and chief executive of Mediterranean Shipping Co, said on the sidelines of the 25th IAPH World Ports Conference in Houston. "It would take about two to three years before the market will come to a balance."
The number of new container ships joining the active fleet has been outpacing demand growth because of a surge in orders for new ships in early 2000. Also, not only are there more ships, but the ships are larger and faster. The average container ship size in 2007 is pegged at 2,191 20-foot equivalent units (TEUs), compared with 975 TEUs in 1980, according to data provided by Drewry Shipping Consultant.
The maximum container ship size in 2007 is 13,500 TEUs, compared with 3,057 TEUs in 1980. Barring any disruption to the world's economy, Arena expects the container shipping market to remain resilient.
As of early February 2007, Mediterranean Shipping was operating 326 container vessels with an intake capacity of 1.06 million TEUs. The 25th International Association of Ports and Harbors World Ports Conference began on Monday and ends on Friday.