Mediterranean Shipping Co., announced last week that they are forming an accord with CMA CGM SA, which is the world’s third largest container shipping group. Mediterranean Shipping Co. is forming the accord to try and avoid some of the damage from the current slum in the global shipping industry.
Idled Vessels on the Rise
There is a rise in idled vessels that carry cargo containers, which is due to a lack of demand and an oversupply of ships. The research group in Paris, Alphaliner Shipping, noted that the number of idle vessels is at the highest point in 18 months. This number amounted to 210 ships with a combine capacity of 526,000 units.
There are slight growth numbers for global trade this year, but they are not truly significant, the decade overall has seen a drag in import and export numbers. The small amount of growth is most likely due to the growth of the global population as it increases by 18 million people each year.
Rising Capacity Signals Lower Demand
Imports from Asia to the West coast are advancing by 2.7%. Exports to Asia from the U.S. grew by 1.5% this year. Exports from Europe to Asia rose by 4.5% this year, while ship capacity rose by 8%. This demonstrates the disconnect between rising volume available for trade and the actual demand for trade.
Nikolaj Kamedula, employee of SEB Enskilda in Copenhagen, commented on the current trade situation: “Container lines are facing a tough year of single-digit demand growth.”
Vessels Outpacing Growth in Trade
In the last four years, the total number of shipping container vessels on the globe rose by 17% to total 4,774 vessels. This data was complied by Redhill, a shipping data provider located in England. The growth in vessels has surpassed the growth in trade, which has caused the large number of idle vessels around the world’s ports right now.
Mediterranean Shipping Co. has doubled its size since 2004. The large shipping company owns 463 ships total, and now it will share space on the vessels with CMA CGM Marseille.