Oversupply in Next Year's Shipping Market? 'Nearshoring Expansion' Opinion Met with 'Not Sure?'

Busan International Port Conference, Advancing as a Specialized Platform for Shipping Market Outlook

BPA Reflects Changes in Shipping Logistics Market... Ensuring Strengthened Competitiveness of Busan Port

Busan Port Authority (BPA, President Kang Jun-seok) has attracted attention from stakeholders with the major outlooks on the shipping market discussed at the 11th Busan International Port Conference (BIPC), held on November 28-29.

In the first session of BIPC, Lars Jansen, CEO of Vespucci Maritime, responds to questions about the prospects of nearshoring.

On the 5th, BPA summarized and announced the key analyses from experts at BIPC.

In the first session of BIPC, titled "Global Shipping Market," Lars Jensen, CEO of Vespucci Maritime, presented on the topic "Container Shipping Market: Major Changes from 2024 to 2030," expressing concerns about the shipping market outlook after 2024.

The main cause is the anticipated oversupply resulting from excessive ship orders by shipping companies during the shipping boom following the pandemic. Contrary to the situation when logistics costs skyrocketed due to the inability to secure vessels, from 2024 onward, the ships ordered during that period will be successively supplied to the market. This oversupply of vessels exceeding demand is expected to weaken shipping companies' freight rate negotiation power, cause idle ships due to oversupply, and further lead to business deterioration.

There was also an unusual opposing opinion regarding the market views on "Near-shoring."

"Near-shoring" refers to relocating production bases to nearby or neighboring countries.

CEO Lars Jensen argued, "Although near-shoring, moving production bases out of China to Southeast Asia, South America, etc., has reportedly increased due to recent US-China trade conflicts and global supply chain disruptions, there is no actual evidence supporting this."

As the basis for this claim, he pointed out that container sea freight costs are very minimal compared to the value (amount) of import and export cargo, so global companies still produce in existing production bases like China to find cheap labor, and this is likely to continue in the future.

He also emphasized that the common belief that near-shoring shortens sea transport distances and is therefore more environmentally friendly is not necessarily true.

"Intra-regional short-distance transport uses small to medium-sized vessels, which causes 'dis-economies of scale,' potentially resulting in higher emissions per unit of cargo," he said.

In fact, according to Sea-Intelligence, a Danish shipping research and analysis organization, the average sea transport distance per container cargo 1TEU has continuously increased over the past five years, which can be seen as data contradicting the claim that near-shoring is increasing.

The Busan Port Authority, which hosted this event, plans to utilize the various proposals and outlooks discussed at the 11th Busan International Port Conference to establish marketing strategies aimed at strengthening the competitiveness of Busan Port in the future.

BPA President Kang Jun-seok said, "The rapidly changing external environment, including changes in the shipping market, digital transformation of ports, and strengthened environmental regulations, presents both a crisis and an opportunity for Busan Port," adding, "We will generously support BIPC to continue serving as a forum for discussions among shipping and logistics experts, and ensure that the opinions discussed are reflected in the operation of Busan Port."

This content was produced with the assistance of AI translation services.