Shipping industry faces overcapacity on Asia-Europe route

Singapore - Shipping firms could aid the severe overcapacity in Asia-Europe routes by reducing their services and return some ships to charterers, said a Neptune Orient Lines official.

Dan Ryan, Greater China president at NOL's APL unit said, "The current situation in Asia-Europe is far worse than during the last cyclical downturn."

Demand growth and utilisation levels in Asia-Europe routes are falling, and the shipping industry would not be able to absorb the large volume of colossal container ships that will be put in service, said Ryan.

On the wealth accumulation in many Asian nations as well as the impact of the vibrant Middle Eastern markets, Ryan said, "A bright spot for container shipping was the continued growth in the Intra-Asia trades."

Ryan posted a more optimistic outlook for Trans-pacific routes, forecasting that Asia-North America capacity will drop in 2008 and 2009 after rising in the last five years.