GERMANY's Hamburg Sud Group has warned of a possible slump in the shipping industry in 2006 as a result of increasing vessel capacity entering the market.

A company statement said that it expects a charter tonnage capacity expansion of approximately 15 per cent in the second half of 2006 when substantial numbers of new large container ships of over 6,500 TEU are to enter the Far East trades.

"From today's vantage point, it is uncertain whether the additional capacity entering service will be absorbed by continuing cargo growth, especially by the Asian economies, or whether there will be overcapacity, possibly leading to a slump in charter rates and a decline in newbuilding prices.

"Furthermore, it is impossible to say at the present time whether international shipping will experience a 'dip' of limited duration or a deeper slump," Humburg Sud said in the statement.

The group also announced that its vessels handled 1.4 million TEU in 2004, or 24 per cent more freight than in 2004.

At the same time, the group also announced that its turnover last year grew by 31 per cent to EUR2.6 billion (US$3.35 billion), despite the increasingly weaker US dollar.

At the end of 2004, the company's fleet totalled 141 vessels including 82 container ships with a slot capacity of around 169,000 TEU, and its container inventory increased by 21, to 188,000 units.

The group's investment in 2004 amounted to EUR300 million, almost 60 per cent above that of the previous year. In addition to container purchases worth more than EUR100 million, expenditure was incurred for four new 2,500 TEU vessels and final payments for three "Monte" class ships delivered during the year.