Global liner overcapacity cycle running its course, executive says

The long-running cycle of global containership oversupply is coming to an end, according to a top North American executive of Swiss freight forwarding and logistics giant Kuehne + Nagel Inc., predicting that the lines of supply and demand at his company, the world's largest ocean forwarder, will cross sometime in 2018.

Bill Rooney, vice president, trade management, North America for the Swiss company, said global supply and demand should come into balance industrywide in 2019, which will lead to higher freight rates as solid demand meets with a dramatic reduction in the number of global carriers due to consolidations and bankruptcies, notably the August 2016 collapse of Korean liner Hanjin Shipping Co., then the seventh- largest carrier.

"Volumes have been strong from Asia to the U.S., and from Asia to Europe," Rooney said during a panel session last Wednesday at the Georgia Logistics Summit in Atlanta. Perhaps to underscore the strength of seagoing business, Frank Guenzerodt, president of Dachser, the U.S. unit of the German logistics concern, said the company's airfreight operations are benefitting from a spillover effect as shippers find sea freight space harder to come by.

"Ocean carriers are running at 100 percent of capacity," Guenzerodt said on the same panel.

In an effort to reconcile capacity and reduce costs that soared during a prolonged period of vessel over-ordering, the world's largest liner carriers re-organized into three vessel-sharing alliances, which hit the water April 1. In addition, there have been fewer ship calls because of the higher costs of operating mega-vessels capable of transporting 13,000 twenty-foot equivalent unit (TEU) containers.