RATE WARS | Idle boxship fleet on the rise

The number of idle containerships has started to swell again in what is the first significant rise for nearly eight months.

There are now 74 unemployed vessels, as compared with just 60 in the middle of June, with the prospect of more layups to come over the summer, according to analyst Alphaliner.

That may be just what the market needs as it struggles with vessel oversupply, add market experts at Drewry.

The idle fleet is estimated to have increased over the past two weeks from 75,000 teu to 95,000 teu, according to Alphaliner’s latest figures.

This is attributed to charter redeliveries and service suspensions, with most of the newly unemployed ships in the 500-teu to 2,000-teu range.

Recent layups include six ships redelivered by South Korean operator YSC Line, which has sought court protection, as well as vessels linked to the ongoing service suspensions of CSAV and others.

Unless volumes pick up unexpectedly in July and August, prompting carriers to launch new strings, the idle fleet is expected to rise steadily, Alphaliner warns.

Meanwhile, Drewry’s quarterly Container Forecaster calls for more layups to provide a much needed correction to the oversupply situation.

It suggests that even a decent surge in peak-season demand in the coming weeks will not provide enough momentum to lift severely eroded freight rates in the key east-west trades.

Container operators face a very challenging environment in which to make money this year, in spite of Drewry forecasting 8.1% growth in global container traffic for 2011.

As a result, it expects a 20.8% year-on-year decline in 2011 for average east-west freight rates excluding fuel. It suggests that other than rising bunker costs, the responsibility for unprofitable business models must lie with the carriers themselves.

Drewry also criticises the transfer of ships from one trade to another as larger vessels of 13,000 teu are deployed in the head-haul transpacific and Asia-to-Europe routes. Average load factors on some of these routes are lingering at only 80% to 85%, while spot rates on the Asia-to-Northern Europe trade are not even covering quoted bunker surcharges of around $750 per teu.

Planned rate-restoration programmes have been postponed and there is little hope of carriers imposing meaningful peak-season surcharges, it adds.

“The industry knows that laying up ships is the answer and that attempts to withdraw limited capacity from the main east-west trades is not enough corrective surgery,” Drewry said.

“The fact that many ships are just being recycled into other trade lanes is also merely transferring the pain elsewhere.”

Source: Tradewinds


Leave a comment

Filed under News

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s