International Journal on Criminology Volume 6, Number 2, Winter 2018/Spring 2019 | Page 70

The Toxicity of Maritime Overcapacity
To measure and therefore compare shipping capacity and freight, the growth
rate of these two variables are taken as a basis. When the growth rate of fleets is
higher than the growth rate of freight, there is instant overcapacity. And if this
discrepancy is reversed the following year, then there is an adjustment that negates
this instant overcapacity, facilitated by the growth in freight. True overcapacity is
established when, over time, annual instant overcapacity accumulates. It is then
called cumulative overcapacity. When the numbers show that there is cumulative
overcapacity, we verify the impressions of the operators in the segment of ships
concerned at that time.
In this way, three very different profiles are obtained depending on the fleets.
Container ship fleets are undergoing a phase of instant overcapacity that is
currently being absorbed. The container shipping sector is an oligopoly that has
chosen concentration and gigantism to reduce costs on the main shipping routes.
This sector has also begun dismantling ships that are less than ten years old. The
race to gigantism is striking, notably within the CMA CGM Group , 12 which in
2017 introduced a very high-capacity ship to its fleet and ordered nine more. 13
This instant overcapacity came with a drop in transportation prices (freight rate),
as supply exceeded demand. In 2017, however, there were weak signals that the
sector was regaining strength. 14 The ongoing absorption of overcapacity can be
explained by the concentration of operators (oligopolies) and the redistribution of
fleets between main and secondary shipping lanes. On the main routes (Asia-Europe,
Asia-North America, and Europe-North America), the situation is realistically
no longer one of cumulative overcapacity. Nevertheless, it does not mean that
there are no situations of overcapacity on the secondary shipping routes, which
follow the same capitalistic trajectories as operators on the main routes.
With tanker ships, the situation is noticeably different. In this case, it is
easier to see the structure of global fleets in strata of overcapacity resulting from
different global surges on the market. The strata can be identified by looking at
the age classes that appear the most often, which can be correlated to historical
surges largely indexed to the price of a barrel of crude. 15 Generations of an excess
number of ships propagate over time, and these are combined with phenomena of
instant overcapacity linked to decisions made to build ships or to lower freight in a
crude oil, liquified natural gas (LNG), and refined petroleum products.
12 A large French container shipping company.
13 This ship has a transport capacity of 20,600 twenty-foot equivalent units (TEU), whereas two years
ago the mega-capacity ships could transport around 18,000 TEU, the global average being approximately
6000 to 8000 TEU per ship. The main container ship operators are following this trend.
14 In fact, loaders (clients of the transporters) were concerned about the concentration of operators
in container shipping and anticipated an increase in prices. This increase came about during the
second half of 2017.
15 In 1993, 2002, 2005, 2009, and 2012, i.e. at times of chaotic movements of recovery in the markets
of oil products following economic crises.
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