Idle capacity to rise by 50%
November 10, 2011
Idle container capacity is expected to increase by around 50% over the next two months, to reach 600,000teu by early January, according to the latest forecast from Alphaliner.
Having reached a recent low of around 100,000teu earlier this year, the volume of idle container capacity has been on the rise as freight and charter rates weakened and boxship owners and operators have found it harder to employ their vessels.
“The hefty imbalance between supply and demand leaves carriers with surplus tonnage that they will have to lay up, at least until volumes start to pick up again after the lunar new year,” Alphaliner says in its latest weekly report.
It estimates that at present, the idle containership fleet has risen to 398,000teu, made up of 185 ships. Out of these, 50 are controlled by carriers, while the rest belong to non-operating owners.
“Owners of panamax tonnage are under increasing pressure as demand for ships of this size have strongly declined following service reorganisations favouring larger ships,” the report adds.
The statistics show that of the 185 idle ships, only one has a capacity of above 7,500teu and only seven are sized between 5,000 and 7,500teu.
The 1,000-2,000teu capacity vessel sector has the largest number of idle ships – 68. Although not up at the highs of 2009, when the containership sector was suffering from the worst year in its history, the pace at which the idle fleet grows is accelerating.
Following the global financial crash of September 2008, when trade credit was frozen and containership demand plummeted, a huge volume of capacity was put into lay-up.
For most of 2009, the idle fleet did not dip below 1.2 million teu of capacity, and reached a peak of over 1.5 million teu late that year and in early 2010, Alphaliner statistics show.
However, these numbers quickly fell away last year, as the boxship market appeared to be bouncing back and lines reactivated vessels into service, only for the sector to take a downturn this year.
A significant fall in consumer demand from Europe and the US, due to an uncertain outlook for the global economy, has reduced the volume of cargo retailers have wanted to ship on the main trade lanes out of Asia.
The transpacific trades in particular have suffered from lower demand, pushing four newcomers out of the market only two years after they started services.
TCC, CSAV, Horizon Lines and Grand China Shipping have all withdrawn their transpacific services. This leaves Hainan and TS Lines, which are struggling to maintain their presence and have slimmed down their joint services among the newcomers operating on the transpacific routes.
A report in IFW’s sister publication Lloyd’s List says the combined Asia-US share of the six new entrants peaked at 5% in July and is forecast to fall to 1.5%.
Clarksons Securities freight derivatives broker Ben Gibson has said that the exit of the four carriers would lead to a stabilisation of rates, which has started to take place over the last fortnight as the Shanghai Containerised Freight Index, World Container Index and Drewry’s transpacific box freight rates have moved back up above $1,500 per feu.
He added that, in general, cargo volumes were decreasing in line with seasonal expectations following a disappointing peak season and the end of the Christmas and Thanksgiving ordering season.
Alphaliner’s idle fleet forecast is similar to estimates made by Macquarie Equities Research, that laid-up capacity would reach 5% by the end of the year, up from 0.6% at the end of June and 2.5% in mid-October.
Courtesy of IFW
