September 24, 2008 / 5:33 AM / 9 years ago

NOL exec warns of Asia-Europe shipping overcapacity

SINGAPORE, Sept 24 (Reuters) - A Neptune Orient Lines NEPS.SI official said on Wednesday there was severe overcapacity in Asia-Europe routes and called on shipping firms to reduce their services and return some ships to charterers.

“The current situation in Asia-Europe is far worse than during the last cyclical downturn,” Dan Ryan, Greater China president at NOL’s APL unit, said at a conference in the Chinese city of Tianjin, according to a statement by the Singapore firm.

Ryan said demand growth and utilisation levels in Asia-Europe routes were contracting, and the industry would not be able to absorb the high numbers of very large container ships that will be put in service.

NOL owns APL, the world’s seventh largest container shipper, and could jump to the world number three if it succeeds with its bid to acquire Hapag-Lloyd, the world’s number five shipper. Hapag Lloyd is a unit of Germany’s TUI (TUIGn.DE).

The APL official was more optimistic about prospects for Transpacific routes, predicting that Asia-North America capacity will contract in 2008 and 2009 after rising in the last five years.

“A bright spot for container shipping was the continued growth in the Intra-Asia trades,” he said, adding this illustrated the growing wealth in many Asian nations as well as the impact of the dynamic Middle Eastern markets. (Reporting by Kevin Lim; Editing by Neil Chatterjee)

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