Dive Brief:

• Ocean transport overcapacity is expected to end in 2019, as Kuehne + Nagel's Vice President of Trade Management, North America Bill Rooney said to DC Velocity at the Georgia Logistics Summit.
• Carriers are now running at 100% capacity, according to Dascher President Frank Guenzerodt, who was a co-panelist at the same event.
• Such comments have become common throughout the industry, with executives like A.P. Moller Maersk's CFO joining the chorus to say the worst had passed.

Dive Insight:

Perspectives from forwarders and container lines are extremely valuable, as they often reflect real-time demand and supply, but various reports show analysts are resisting the urge to declare the end of the cargo shipping industry's misery.

Container lines may have slowed orders, scrapped thousands of TEUs and consolidated, but the issue of utilization, economic cycles, and larger ships' cascading effect remain. Alphaliner Executive Consultant Tan Hua Joo told both The Loadstar and JOC.com the larger-ship trend is far from over. Meanwhile, SeaIntelligence Consulting's Lars Jensen recently wrote container lines still need to improve their cargo mix.

Hanjin's bankruptcy may have taken several ships out of the market, for example, but the vessels did not disappear. The 200,000 or so TEU will eventually reappear on the market, but with a different owner. Similarly, larger ships on new routes are having the effect of crowding out ships in smaller trades. Known as the cascading effect, this continues the trend of ships getting larger, pushing ports to prepare to handle larger ships, thereby decreasing the need for smaller ones altogether.

The Port of Virginia, looking ahead, is betting ships will still get larger by further increasing its depth, despite having recently handled the first post-panamax vessel on the U.S. East Coast. Alphaliner data reveals the top 10 ocean carriers have 2 million TEUs on 161 vessels on their orderbooks, with the average new vessel carrying 13,560 TEU, or post-panamax size. The market may be stabilizing for now, but long-term trends and economies of scale dynamics suggest capacity will continue to increase. Whether the industry will be able to avoid continued overcapacity remains to be seen.