Idle Fleet Sticks Despite Strong Cargo Demand

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The idle container ship fleet has crept slightly higher even as strong cargo demand across all liner trade lanes continues to spur activity in the charter market, according to industry analyst Alphaliner.

First-half container volumes are up 6.7 percent year over year, according to Alphaliner, and maritime analyst Drewry says that traffic rose 5.6 percent. Both analysts agree that the industry is headed for its best year in terms of volume growth since 2011.

There were 182 jobless vessels with a combined capacity of 473,800 TEU as of August 7, compared with 176 vessels of 472,990 TEU two weeks earlier, equivalent to 2.3 percent of global capacity.

Several top ports in Asia, the United States, and Europe posted record container traffic in July, but the extra volumes so far are being absorbed by available tonnage, including new ultra-large vessels of 14,000 to 21,000 TEU that are coming on stream.

“This has kept both the charter rates as well as freight rates at relatively sluggish levels,” Alphaliner says.

Extra loaders from Asia to the East Coast of South America, West Africa, and the southern United States have helped cut the overhang of classic Panamax ships, while an active sale and purchase market has soaked up available capacity.

However, the number of unemployed Panamax vessels remains persistently high, Alphaliner says, with 51 units of 3,000 to 5,100 TEU without work, of which 39 are classic Panamaxes.

Although higher volumes have boosted demand for feeder loops, unemployment among smaller vessels has remained “stubbornly” high, with 117 units of between 500 TEU and 3,000 TEU idle, compared with 111 units in mid-July.

With less than two months before peak season demand starts to weaken in October, there is only a limited window for charter rates and freight rates to rise before the onset of the winter slack season, according to Alphaliner.

The idle fleet could rise above 950,000 TEU by the end of the year, with more than 700,000 TEU of new capacity scheduled for delivery over the next five months, adding to the supply pressure in the market.

Vessel scrapping has also slowed down since April, with only 150,000 TEU expected to be demolished in the second half of the year compared with 400,000 TEU in the same period in 2016 and 295,000 TEU in the first half of 2017.

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Source: JOC

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