A leading executive has warned of the prospect of overcapacity returning to the liner trades.

Hapag-Lloyd chief executive Ralf Habben Jansen believes that a large newbuilding programme, easing congestion and declining demand will start to impact on the sector in the coming months.

With the orderbook at 25% of the global fleet, there is the prospect of oversupply in certain trades in the short to medium term, he told journalists on 10 June.

“Further out the orderbook is not that concerning, but if you look at the next 24 months, there will be at least places where there will be some oversupply,” Habben Jansen said.

Talk of overcapacity has been practically absent from the market for nearly two years, since container shipping underwent an unprecedented pandemic-inspired boom.

But the war in Ukraine and ongoing lockdowns in China have impacted sentiment in container freight markets.

Spot rates are on a downward trend since the start of the year, “a trend I believe will continue”, Habben Jansen said.

“When you look at the global economy — there are the first signs of an economy that is cooling down,” he said. Logically, that could extend to the liner trade, he added.

Container volumes have fallen from January to April by -2.4% year on year, according to figures from Container Trades Statistics.

Port strikes at Hamburg’s HHLA terminal could add to congestion in Europe. Photo: HHLA/Dietmar Hasenpusch

So forecasts issued at the start of 2022 pointing to flatlining volume growth had started to look overly optimistic.

Habben Jansen described the container ship orderbook as “very significant”, especially given that so many vessels were stuck in congested ports.

“We will start seeing the effect of that on the supply and demand balance from the second half of this year,” he said. “As we start to see the first ships come out of the yards during or shortly after summer, and after that will continue for two years or so.”

This would be further impacted by the unwinding of congestion and the prospect of ships being delivered into the market earlier than expected.

Habben Jansen suggested that supply and demand were balanced at the present time. But he said the joker in the pack was the extent of “residual congestion” and the impact of environmental laws that will affect the fleet from 2024.

‘Turbulent times’

“These are still turbulent times,” Habben Jansen said.

The market is still shaped by the pandemic and the war in Ukraine, but he said there are signs that rates could revert to what was seen in 2018 and 2019.

“How quickly remains to be seen,” he said.

However, freight rates were likely to cool towards the end of the year after the peak season when he said demand was unlikely to be “exceptionally strong”.

Liner operators still faced the challenge of rising costs, with high charter rates and bunker prices continuing to rise.

Other problems remain due to bottlenecks caused by prospective labour disputes in Germany and on the US west coast.

Habben Jansen added that the easing of congestion is likely to increase the supply of vessels in the coming months.

“It won’t go away any time soon, but congestion will ease from the second half of this year,” he said.