HONG KONG: On the Bayonne Bridge, high above the water that connects New York harbour with New Jersey’s Newark bay, workers are starting to build a new roadway 64 feet above the existing one. This ambitious construction project will clear the way for the new generation of giant container ships to reach New Jersey’s bustling terminals, part of the US east coast’s busiest port complex.
The need to raise the Bayonne Bridge highlights how container shipping lines are betting on scale to solve their deep-rooted problems — partly by investing in bigger vessels and, in some cases, by embarking on mergers. The latest evidence of this came on Sunday when France’s CMA CGM announced it was in exclusive talks to buy Singapore’s Neptune Orient Lines, a lossmaking line that operates under the APL brand name.
Yet the question for the industry is whether the quest for scale will alleviate or exacerbate a looming crisis resulting from the collapse in demand to ship goods to China, container shipping’s biggest single market. Average freight rates to move a forty-foot container on the world’s main east-west trade routes have nearly halved since August to about $840, as the industry’s capacity growth far exceeded demand.
Many analysts say that a purchase of NOL — operator of just 2.6 per cent of the world’s fleet — might provide CMA CGM with little respite from these tough conditions.
