Shipping Industry Warns of Return to Strained Capacity

By The Journal Of Commerce, PRNE
Sunday, November 21, 2010

NEWARK, New Jersey, November 22, 2010 - Although supply and demand in the container shipping industry appears in
balance for next year, a growing field of analysts and industry insiders is
warning that new capacity shortages are looming beyond 2011. Ongoing
tightness in the availability of bank financing and a relatively lean
pipeline for production of new equipment are pushing this toward certainty,
according to this week's edition (
of The Journal of Commerce.

(Photo: )

Analysts say the limited access to new capital for new vessels, along
with the slow resumption in the construction of new ocean shipping
containers, could lead to tight capacity in 2012 for retailers and
manufacturers that faced a volatile market for supply and demand earlier this

"You are not going to see a lot of orders over the next two or three
years, not because carriers are more disciplined, but because there is no
money," said Tom Kim, Goldman Sach's Hong Kong-based shipping analyst. "We do
think that the lack of ship finance is going to constrain carriers from
ordering new vessels. … Those that have strong balance sheets … will have
access to capital, but the vast majority of the industry will not."

It's a question of timing - how long can the global capacity and demand
of container shipping remain in balance? This week's Cover Story
( in The Journal of
Commerce examines the current appearance of stability and its potential
tipping points. Looking ahead to 2012 and beyond, JOC Senior Editor Peter T.
analyzes the dynamics at work on the vessel, equipment and shipper
sides that might bring about a repeat capacity crisis.

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