Evergreen: Falling oil prices risk higher ship speeds and more oversupply

FALLING bunker prices in the last two months may reduce carrier fuel bills, but they also risk ending slow steaming, which risks even greater overcapacity that has so bedeviled rates in recent years, says Evergreen Group vice-chairman Bronson Hsieh.

Without the slow steaming, Evergreen forecasts vessel supply growth of eight per cent and cargo demand increase of 5.4 per cent in 2015.

"We hope that bunker prices fall, but not too much," he told reporters on the sidelines of the World Shipping Summit in Chongqing.

Lower fuel costs will end slow steaming, start faster ships, which will require fewer vessels on each loop, thus increasing supply and putting further pressure on rates.

"If the worst happens, we'll have a vessel supply growth of 15 per cent next year," he said. "Up to 1.3 million TEU, or seven per cent of the world's total, could be released to the market next year if carriers increase sailing speed." Mr Hsieh said.