Oversupply may hit box ships

OUR BUREAU | Updated on August 28, 2011


Oversupply may hit box ships

The container shipping industry is heading towards a prolonged slump that could last longer than the 2009 downturn, warns Shipping Gazette, quoting Paris-based maritime consultancy Alphaliner. The current slump, unlike the 2009 recession, is caused by an oversupply of capacity and weak demand growth in the European and US economies. In the absence of a strong rebound of the Western economies, trade growth is expected to remain behind fleet growth for quite some time, it is said. The lull in containership orders between the fourth quarter of 2008 and the first quarter of 2010 brought the order book down from 60 per cent to 26 per cent of the fleet, but the strong recovery in 2010 led many shipping to add to capacity hoping a sustained recovery for the industry. This triggered a new wave of containership orders and the 2.3 million TEU of capacity contracted since June 2010. Some industry sources continue to underestimate the impact of the excess supply problem, citing supply growth figures of 7 per cent for 2011 and 2012 and a capacity shortage in 2013 but the report emphases that the growth rate for 2011 and 2012 will be close to 8.5 per cent, while the 2013 supply growth will exceed 10 per cent, due mainly to the recent surge in orders.

Talcher coal loading hit

Rake loading of coal at Talcher mines of Mahanadi Coalfields Ltd has been hit for over two weeks now. As a result, the daily loading has dropped to 17 or 18 rakes a day from the usual 25 or 26 rakes. With no immediate solution to the crisis in sight, the power houses dependent on Talcher mines are, it is learnt, apprehensive of coal shortage affecting generation as the stocks are getting depleted. The list of power houses linked to Talcher mines is impressive and includes Tamil Nadu Electricity Board, APGENCO, Raichur power plant in Karnataka, several generating units under Orissa Power Generation Corporation and a large number of captive power plants of Vedanta, NALCO and cement plants and paper units in West Bengal, Orissa and Andhra Pradesh. Coal India Ltd's fuel supply agreement presupposes loading of 32 rakes a day at Talcher. However, the railways can load a maximum of 28 rakes a day on a sustained basis thanks to various infrastructure bottlenecks. The present situation causes concern also the railways. After all, coal is the single largest item of traffic, accounting for 53 per cent of the traffic of East Coast Railway serving the Talcher mines.

Relief plan for Pakistan Railways

Pakistan Railways - considered by the World Bank as one of the world's largest loss-making public sector enterprises with accumulated loss since 2007 amounting to PKR 80 billion - is working on a revival plan to boost freight services with support from private firms, reports London's International Freighting Weekly. The plan presupposes an agreement with the National Logistics Cell, three major terminal operators at Karachi port, Daudkhel Cement and Shell Pakistan. The private firms will provide PKR2 billion ($23 million) for modernising 20 diesel locomotives at the railway terminals in Rawalpindi, Lahore and Karachi. Pakistan Railways will also secure a loan of PKR2 billion. The plan is awaiting the approval of the railway ministry. Once the plan is approved, the railway authorities will collaborate with terminal operators, cement firm and multinational oil company to carry out a survey on how to run a successful freight train service. Once operational, the locomotives will be used to run freight train services from Karachi to the rest of the country. Pakistan Railways has a stock of 16,499 freight wagons with capacity of 47,000 tonnes, the report adds.

Published on August 28, 2011

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