Problem

Excess capacity in the shipping industry

Other Names:
Overtonnaging
Nature:
A persisting overtonnaging crisis in the shipping industry cannot be dismissed as a cyclical phenomenon, and it gravely affects the long-term interests of both developing and developed countries. Scrapping proceeds apace, while going freights in traditional tramp trades have declined to the point at which some owners, who attempt to operate rather than to scrap their ships or to let them lie idle, have been reduced to accepting rates at well below operating costs (or lay-up levels). Liner freights have fluctuated in many trades, where they may receive sympathetic shipper response at one moment and despair the next as a result of the chaotic tonnage supply situation. At the same time, in other conference trades, the perennial problems with regard to the adequacy of services, freight levels, surcharges, dispensation, cargo share, technological innovations and changing patterns of trade, have intensified, with prominent 'lines' or powerful 'outsiders' continually either seeking or resigning from membership.
Incidence:
The world-wide economic recession of the 1980s has retracted demand for shipping space to the extent that 64.5 million dwt tons of shipping, representing 7.2% of world tonnage, are laid up (mid-1982).
Problem Type:
E: Emanations of other problems
Date of last update
01.01.2000 – 00:00 CET