Megaships worsening glut in container market

London

CONTAINER shipping lines are poised to take delivery of a new generation of "megaships" over the next two years, just as the growth of world trade is slowing down, contributing to massive overcapacity in the market.

Megaships, which can be up to 400 metres long, seem to be here to stay, not least because so many more are already on order, the product of high fuel costs and low interest rates.

But the trend towards larger vessels is not without problems especially for other businesses in the transport system and the trend could be nearing its limit as the economies of scale associated with megaships decline.

Container shipping capacity has doubled every seven years since the turn of the millennium and will reach nearly 20 million twenty-foot equivalent units (TEU) in 2015 up from five million TEUs in 2000. But since the financial crisis, container capacity has continued to grow rapidly, even as the growth in freight volumes has slow…