MOL sees container supply/demand balance until 2006

MOL sees container supply/demand balance until 2006    Research by Mitsui O.S.K Lines into the main east-west container trades predicts that supply and demand will remain largely in balance up to 2006.
   Cargo growth over this period will keep pace with or even exceed the expected large increase in vessel capacity, as proved the case in both 2002 and 2003, according to the Japanese carrier.
   In 2002, a record ship capacity increase of 640,000 TEUs entered the world containership market, but was exceeded by demand growth in the same year. The demand was led by China-generated cargo flows in the Asia/North America and Asia/Europe trades. These continued strongly into 2003, even putting pressure on vessel utilization during the winter season, the research found.
   MOL’s research team predicts that similar strong growth trends will persist in both supply and demand through to 2006, and that, despite some fluctuations, they should remain largely in balance.
   These conclusions are based on individual studies of the three main east-west trades.
   MOL predicts that a wave of post-Panamax vessel deliveries in the transpacific will drive 2006 capacity 40 percent above the level in 2001, but it assumes the U.S economy will recover from 2003 onwards, boosting the eastbound trade demand by 9 percent in 2004 and 6-7 percent annually thereafter.
   In the Asia/Europe trade, the pattern will be similar, but with 2006 capacity 50 percent greater than in 2001, MOL said. Growth in westbound demand is put at 16 percent in 2003, falling back to 2-3 percent in 2004, and increasing faster in later years.
   In the transatlantic, MOL’s research department predicts that capacity will reduce by about 1 percent each year in 2003 and 2004, and will be growing by an annual 3 percent thereafter. Westbound demand increased by 5 percent in 2002, by 3 percent in 2003, and is expected to grow by 5 percent in 2004. Eastbound demand growth is set at 4-5 percent per year from 2003 2006.
   MOL based its prediction of continued market growth through to 2006 on factors like the high level of housing construction in the U.S., which has been driving up the cargo movement from Asia since 2002. As for Europe, the private equipment investment has been upwards since early 2002, which seems to be one of the causes of huge growth of cargo movement for Europe.