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The Boston Consulting Group (BCG) said that it is optimistic that global container trade is expected to grow by 3.8% by 2020.

BCG General Manager Camille Egloff said at the Global Liner Transport Conference in Singapore that the optimistic forecast is based on regional trade between Asia and Europe and Europe. Although the EU has stepped up its sanctions against the Russian ruble, its cohesion policy is expected to reinvigorate consumer confidence.

And pessimistic forecasts, global container trade is expected to grow by 2.2% by 2020.

In terms of trans-Pacific trade, improved employment conditions and low interest rates in the United States promoted imports, while China’s capital expenditures promoted return trade.

In terms of regional trade in Asia, the offshore production business in China to Southeast Asia and the increase in private consumption in China may increase trade in the region. The slowdown in China and the increase in debt may drag down import trade.

In terms of trade between the Indian subcontinent and the Middle East, trade in the Gulf countries is expected to increase and crude oil prices remain low. India continues to strengthen its logistics infrastructure. In addition, Middle Eastern countries may be in a long-term low oil price environment.

        Egloff said that the development goals necessary for the industry recovery include: shipping companies speeding up shipbreaking, resisting cheap financing temptations, limiting ship orders, and narrowing the gap between supply and demand.

In order to balance the supply and demand, BCG expects the excess capacity of 2 million to 3.3 million teu to be removed from the market.

According to Egloff, based on current fleet forecasts, approximately 24 million teu will be serviced by 2020. The fleet forecasted to enter the market this year is 20.5 million teu. Shipping companies need to make a plan for lower ship utilization – about 85%, and container utilization is lower than the cost of capital preservation.

“The industry should stay away from price competition. As the EU ends GRI, the risk of price wars will increase.”

In addition, Egloff also recommends that shipping companies gradually accept digital business operations, improve cost control and optimize the network through navigation monitoring applications. Digital business operations can also be applied to electronic platforms and bill of lading transfers.

Source: China Ship Inspection