There is an unusual development of the shipowners parking their container ships.
Several factors have contributed to this development:
Drewry market sources indicate that the peak season in the transpacific is rather weak. Two attributes, low freight rates and muted demand, have played a part in the unusual decision of carriers to lay up ships in July. It appears that carriers are trying to park unused capacity and also to bring spot rates back up by increasing load factors on remaining active ships.
Several carrier alliances have decided to suspend two transpacific loops at the start of the peak season. This can be seen as first indication that something exceptional was starting to happen in the market.
The factors:
- The data confirm that there has been a large scale increase of idling of box ships. More than 300 container ships were idle in early July, which is the start of the Asian export peak season. It is worth comparing the corresponding status in the two previous years: less than a quarter of this capacity was idled.
- It is also to be noted that the G6 alliance has stopped the CC1 transpacific service. So, 5 of its 6 vessels of about 6,600 TEU are to become idle.
- Similarly, the Ocean 3 alliance has suspended its ‘Manhattan Bridge’ from the second week of July. Hence, 9 ships of about 4,000 TEU became idle.
- Out of the 5 very large idle ships (13,000 TEU), 4 are chartered by financially-challenged Hyundai, although most have just been redeployed on an Asia-Med service.
- With more new ships being delivered, carriers are starting to run out of options in how to deploy even their largest ships in today’s over-supplied market.
- A number of Panamax ships (with capacities of about 4,500-5,000teu) are now idle, following the opening of the expanded Panama Canal.
- As regards the smaller ship segment (< 3,000 TEU), it also has a trend towards inactivity. There has now been no increase in the small-ship global capacity requirement. A part of this change is explained by the intense competition and over-capacity of the intra-Asia market, where a high proportion of smaller vessels are employed.
- In the past two years, the active fleet (net of idle capacity) for ships of less than 3,000 TEU and for 3,000-5,000 TEU has decreased in absolute TEU capacity. Only the active fleet of the 8,000+ TEU ships has increased.
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Source: Port Technology International
