Alphaliner: Record Number of Idled Container Vessels

Bimco
File image courtesy BIMCO

By MarEx 2016-03-16 20:08:55

Alphaliner has reported that as of March 11, the capacity of idled container vessels has reached an all time high of 1.6 million TEU.

The consultancy counts a total of 350 idle ships, about 8 percent of the global fleet – less than the 10 percent level seen in 2009, but high nonetheless. And with roughly one million TEU due for delivery this year and an estimated annual fleet growth of four percent, Alphaliner expects the number to get larger. Demand growth is forecast to be positive, but not enough to keep up with so many newbuilds entering service.

About a third of the idled capacity consists of vessels in the 7,500 TEU and above size range, the firm said.

Alphaliner suggested that ships displaced from softening routes – Asia-Europe, Asia-West Africa, Asia-Latin America – are being redeployed to other business sectors, where the cascading tonnage may be used to replace carriers' chartered vessels off, and disrupting the pre-existing market.

Andrew Abbott, chief executive officer of Atlantic Container Line Canada, recently told the Globe and Mail that the new ultra-large container vessels entering the Asia-Europe trade were pushing out older tonnage onto Atlantic routes, creating a rates “bloodbath.”

“All of these big [shipping] lines have added so many ships, it’s gotten out of control, totally,” Mr. Abbott said. “As they bring on a big, big ship on the Far East-Europe run … they’ve been sticking those [smaller ships] in the Atlantic and dropping the prices accordingly. It’s actually squeezed us a lot.”

Earlier in the month, Drewry reported that an index average of rates on 11 key container routes fell by 60 percent over the past year. 

Still, shipowners’ association BIMCO believes that there is a slim possibility of a recovery in 2016. Government stimulus measures in the Japanese and EU economies could potentially result in increasing demand, the association says, bringing up container rates. Still, BIMCO says that changing conditions in Chinese industry are “bringing more uncertainty in shipping demand,” and that the previous ratio of GDP growth to trade volume may not be the same going forward, making prediction more difficult.