Redundant Tonnage at Its Peak

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2015 shows the highest number of redundant container ships in lay-up.  Of the 208 ships remaining idle, totalling of around 673,000 TEU, 4 are container ships of  around 13,000 TEU namely:  APL Temasek that has been on anchor since August 10th 2015.  As is also the case with MSC’s Margrit and Flavia and UASC’s Tayma.

Reasons behind redundancy can also be assigned in part, to service curtailments imposed by the G6 alliance in response to weak demand from Europe for Asian imports.

The past fortnight has shown around 90,000 TEU of cellular capacity laid-up, which shows redundant tonnage reaching an all time high since March 2014.

To combat the onslaught of winger slack season, container lines are devising new plans.  The G6 alliance plans to combine its two Asia-US east coast services for the winter period and suspend their Asia-US west coast CC2 service from this year’s 44th week onwards.  Maersk Line, on the other hand, is considering to remove two of the four east-west strings during the last quarter of the year.

Most deepsea alliances receive 18000 teu vessels from shipyards and a large number of 18,000 teu-plus ships are due for delivery between 2016 and 2017.  This could render the 13,000 teu type vessels redundant or unemployable.  The world fleet has received an increased capacity of 480,000 teu vessels since July of this year.

Liner shipping analysts Alphaline opines that more container vessels could join the unemployed fleet soon.  They are quoted to have said: “Weak demand across almost all tradelanes globally has taken a heavy toll on containership demand.  On top of this, a constant stream of vessel deliveries continues to add to the supply side pressure.”

A Drewry Maritime Advisors report states that the number of ship scrapings this year is only 47, when compared to 107 during the same period last year.  This significantly less scrapping could be attributed to a spurt of new intra-Asia services and also to some extent to the Asia-US west coast services to the US east coast during strike-related disruption.  In all, the global demand for steel has dipped, leaving the scrap values to plunge.  Besides, the scrapping of the subsidies by the Chinese government has further led to the oversupply of steel and reduction in domestic steel price.

Source: The Loadstar

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