Maersk looks cautiously at containerized maritime transport forecast for 2018

Maersk Line has assured that international transport tariffs are reversing after rising for most of this year, raising questions about the sustainability of the recovery of world trade, Bloomberg has reported.

Oversupply problems for decades have bogged down the demand for containerized maritime trade in the third quarter, Steve Felder, executive director of the Maersk South Asia unit based in Mumbai, said in an interview.

“We have started to see some sectors with downward pressure,” he said. World trade orders are hovering around 13.5% of capacity, which is not high, he explained. “However, since freight rates are determined largely on the basis of the balance between supply and demand, they remain fragile,” he said.

The International Monetary Fund forecasts that growth in world trade volume will decrease to 4% in 2018 from 4.2% projected this year, although it is still higher than the seven-year low of 2.4% achieved in 2016. The concern of US protectionism and China’s attempts to rebalance its export economy towards domestic consumption presents risks for reactivation.

Maersk is not alone. Drewry Shipping Consultants expects the shipping container freight rate to decrease to less than 10% in 2018, from 15% in 2017, as an oversupply occurs.

CMA CGM recently signaled slightly lower rates for 2018 in the first negotiations of contracts on the Asia and Europe route, analysts at Credit Suisse Group AG said in a note on November 29.

“It’s still very early in the negotiation period, but this uncertainty is clearly useless for the investor’s confidence,” they said.

Fitch Ratings expects the supply of container carriers to grow more than 5.5% in 2018, exceeding the expansion of more than 4.5% in demand.

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