Dimerco Consultant Bronson Hsieh Offers Thoughts on Future Supply-Demand Balance in Global Ocean Shipping

IEEPA Refund Calculator Investor Relationship Financial Overview Company Overview Financial Overview Corporate Governance Overview Board of Directors Committees Internal Audit Regulations Shareholder’s Insights Shareholder’s Insights Shareholder’s Report Investor Contact Investor FAQ Contact MyDimerco English繁中简中 Home » Dimerco Consultant Bronson Hsieh Offers Thoughts on Future Supply-Demand Balance in Global Ocean ShippingDimerco Consultant Bronson Hsieh Offers Thoughts on Future Supply-Demand Balance in Global Ocean Shipping by Dimerco | Mar 10, 2023 Bronson Hsieh, former chairman of both Evergreen and Yang Ming container lines, recently joined Mike King for an episode of the Freight Buyer’s Club podcast. Mr. Hsieh is a consultant with Dimerco Express Group, which sponsors this podcast. Hsieh believes that container lines will deploy multiple tools to cut slot supply as new ship orders threaten overcapacity. A multi-pronged capacity reduction effort will help carriers avoid a freight rate war as container shipping demand growth stalls. He noted that carriers “know how to arrange” supply-side reductions and would do everything in their powers to “control redundant capacity.” This will include laying up ships, mass blank sailings and slow steaming to tie up more vessels and cut fuel costs. He also expects older vessels of over 25 years of age, representing around 3% of the current global fleet, to be scrapped, a move which offers the added benefit of helping carriers cut emissions in line with the latest IMO requirements. “If those 3% of vessels will be retired next year, then that really would be very helpful to reduce [capacity] growth ratios,” he added. Hsieh also predicted that carriers would increasingly re-route ships around the Cape of Good Hope “in order to digest more redundant vessels” on Asia-Europe services, a move that would also save substantial Suez Canal transit fees. Check out the full podcast episode below: Bridging the supply-demand gap Combined, these efforts will help bridge the substantial gap between vessel supply and container shipping demand growth this year and next, argued Hsieh. The efforts will be needed to stem revenue losses following the collapse of spot rates on most trade lanes since the summer of 2022 due to bearish economic growth, rampant inflation and high inventories. The container ship orderbook now totals over 7.0m TEU, according to Alphaliner, with the majority of the new vessels due for delivery over the next two years. Moreover, the top-11 container lines are scheduled to receive another 89 large mainlines vessels in the remaining ten months of 2023. “This year will thus see the arrival of the box ship delivery ‘wave’ that follows the ordering frenzy of 2020 and 2021,” noted the analyst. “At least for the time being it looks as if all this extra tonnage will hit the liner trades at a time of faltering container shipping demand.” The result, it added, would be “a return of overcapacity” to container shipping. Learning from the past: Saving Yang Ming Hsieh, whose career in container shipping has spanned some 45 years, offered insight into how carriers could stay profitable in the current downcycle. Back in 2016 when container shipping was suffering a major downturn that pushed Hanjin Shipping into bankruptcy, Hsieh was tasked with preventing Yang Ming from suffering a similar fate. As Chairman of Yang Ming, he quickly curtailed the acceptance of unprofitable cargoes. “Yang Ming’s vessels were always fully loaded,” he told The Freight Buyers’ Club podcast. “It looks good but the ocean freight they generate cannot cover their variable cost. That was the problem. “When I saw this, I realized this [is a] company I think I can manage.” He said that, in 2016, the container shipping demand was “very tough” and too soft to enable carriers to cover their fixed costs from freight rates. Instead, Hsieh told sales representatives to focus on finding cargo “that at least covers the variable cost” and to ditch customers that would not pay “reasonable ocean freight”. “I gave them very strict requirements,” he said. “That’s one of the most important reasons [why in] 2017 Yang Ming started to make money.” This is a guest article from Mike King, Host of The Freight Buyers’ Club podcast Post Tags: Asia Pacific | China | Freight Forwarding | Ocean Freight | Podcast Episode | Supply Chain Solutions We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.ACCEPT Cookie settingsManage consent Close Privacy Overview This website uses cookies to improve your experience while you navigate through the website. 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