NEWS

Zhang Songsheng, managing director of Taiping Shipping in Singapore, said that as freight rates on Asia-Europe routes fell to historical lows, super-large ships were facing increasing pressure, "cargo must be available." Forcing some liner companies to offer guaranteed prices on intra-Asian routes (e. g., China-Japan routes).

Zhang Songsheng said in an interview at the Singapore headquarters of Taiping Shipping, "There are special routes and ship type upgrades for intra-Asian transportation. Now mother ships go directly to the routes. Some large ships are used for empty container transfer and keep the box balanced. During the Spring Festival, some liner companies even have negative freight rates on the China-Japan route, and they are actually posting money to customers to transport their containers."

Zhang Songsheng explained that super-large ships have more space because they slow down and travel longer, so that they can transport goods between certain ports on routes in Asia. In Asia, goods are generally shipped from major Chinese ports to Southeast Asian shipping transit points such as Singapore and Tanjong Port in Malaysia. This has disrupted the original order of freight in Asia and is not conducive to maintaining stable freight rates. Zhang Songsheng said: "There is freight volume, but the income is not necessarily."

Asia is the world's largest container shipping market. The Drewley report estimates that the region's container freight volume reached 59.3 million 20-foot containers in 2013, accounting for 42.2 percent of the global freight volume.

In a recent report by
, Ron Widdows, former CEO of Oriental Sea King and Rick Max and now a senior adviser at McKinsey & Company, said that an increase in container ship capacity above 18,000TEU would trigger a chain reaction that would endanger instability on other routes. He said at the Hong Kong HSBC Annual Maritime Aviation Conference: "As powerful competitors continue to upgrade their capacity, and latecomers bring capacity on other routes to share a piece of the pie, freight rates have been and will continue to be affected."

Asia was once the most stable and attractive trade route. Over the past few years, as more and more capacity has poured in, freight rates have fluctuated and liner companies' profit margins have been squeezed. Very large container ships can only be used on the Asia-Europe trade routes. As liner companies seeking economies of scale continue to order very large ships, traditional 8,000 to 10,000TEU ships have to enter the Asian route.

Although terminal operation requirements may limit the size of ships on specific routes, "many companies use 8,000 to 10,000TEU ships as two-way ships on intra-Asian routes." Dong Jiancheng, chairman of Orient Overseas Group, the parent company of Orient Overseas Container, said.

Kenneth Glenn, president of
U.S. presidential steamship, said that a large amount of capacity has entered the Asian intra-regional ocean route market this year. Although the market is growing strongly, it still puts downward pressure on freight rates.

Glenn said that very large ships are used on the Asia-Europe trade routes, while smaller ships are gradually entering other trade routes. The beginning of 14,000TEU ships on the Asia-Persian Gulf route and the beginning of 13,000TEU ships on the trans-Pacific route are the direct result of the cascade replacement of the Asia-Europe trade route.

"the excess capacity will certainly gradually spread to various routes, but the largest ship into the Asia-Europe route can be said to be the fuse." Glenn said.

when asked when the shipping industry will be able to absorb so much capacity, he replied that at some point there will be diminishing returns. "Cascade replacement is non-linear, not to say that if a particular liner company lacks a ship, the entire chain will change. In the past two and a half years, the total value of new ship orders for U.S. presidential ships has been $4 billion, and 34 ships have been purchased, but our net capacity has not increased. We have also returned 64 charters during the same period."

Glenn said, "You have to know how to make a new ship competitive. Cascade replacements are inevitable, some of which you can control, some of which you can't control."

However, Lars Mikael Jensen, CEO of Maersk Line Asia Pacific, said at the Asian Maritime Conference (Sea Asia conference) that liner companies need to find countermeasures to control the use of large ships, because the Asia-Europe trade route will use 14,000 to 18,000TEU of large ships, while the surplus ships will be put into the north-south trade route. "We have to find a way to deal with this reality."