Evergreen’s chairman sees the container market continuing to flourish

Speaking at the World Shipping Summit (China) 2007 on November 2 in Tianjin, Arnold Wang, Chairman of Evergreen Marine Corporation, addressed the audience on the subject “Growing Demand as Indicated by the Shipbuilding Orderbook”.

Noting that over the past decade, China’s remarkable economic growth has brought structural changes to global container shipping and other related industries, including shipbuilding and terminal operations, Mr Wang reflected on the impressive statistics:“In 2006, container throughput in all Chinese ports reached 80 million TEU, or around one-fifth of the global volume. For cargoes from Asia to Europe and North America, China’s exports have accounted for more than half of market volumes. In 2006 China gained a market share of 65% in the Trans-Pacific eastbound trade and 71% with the inclusion of Hong Kong. In the Far East - Europe westbound market, a market share of 63% was recorded for exports from China alone and 72% with Hong Kong’s contribution.”

Mr Wang also commented on the relationship between global economic growth and container volumes.“There used to be a proportional connection between the growth rates of global economic development and container volume. Under normal circumstances, the increase rate of container cargo is around 2.4 times that of economic growth. But due to the impact of outsourcing trends, the situation has started to change in recent years. The ratio climbed to 2.8 and 3.6 for 2000 and 2003 respectively. In 2004 and 2005, with the outsourcing trends more or less established, the ratio fell to the previous level. According to forecasts by the IMF (International Monetary Fund), the global economic growth rate will range between 4.2% and 4.3% during 2006 - 2010. Based on the cargo multiple of 2.4, global container cargo volumes are expected to increase by 10-11% in the coming years. The pointers above indicate that cargo volumes will continue with stable growth while the tonnage supply will increase slower than expected. Therefore, it is believed that the container shipping market will continue to flourish unless the global economy is impacted by unexpected catastrophes.”

Container shipping is an open and very competitive market, said Mr. Wang.“Changes in capacity demand and tonnage supply will directly influence freight rates and loading performances. Furthermore, this industry requires huge investments but only generates slim profits. In the last 10 years, fierce competition has driven the industry’s profitability down to micro levels or even into frequent losses. Container shipping has become the least lucrative section of the whole logistic chain. For the years to come, it is forecast that the development of the container shipping industry will continue along a rising path, based on continuous cargo growth and stable capacity increases."