Rising demand cuts down idle ship numbers : Alphaliner

Posted by Daily Shipping Times on 04-09-2017        Tweet

LONDON: The idle container ship fleet has suddenly sunk to a two-year low, with 94,000 TEU removed from the jobless queue in the past two weeks as carriers charter more vessels to meet rising cargo demand, which is forecast to hit a six-year high this year.

There were 151 unemployed vessels with a combined capacity of 377,925 TEU as of Aug. 21, down from 182 ships of 473,800 TEU two weeks earlier, according to industry analyst Alphaliner.

This has cut the unemployment rate to 1.8 percent of global container capacity from 2.3 percent on August 7. Carriers have largely succeeding in matching demand with capacity, as no mega-ships greater than 20,000 TEU were delivered, according to IHS Markit data, which shows that this years 17 vessels with a combined capacity of 350,000 TEU are set for delivery.

The rise in employment is driven by strong demand across almost all trades, including on North-South routes, which benefits medium-sized tonnage, Alphaliner said.

The number of idled smaller ships has also declined due to rising feeder volumes generated by the buoyant deep-sea trades.

The restructuring of Europe-east coast South America (ECSA) liner services led Hapag-Lloyd to bring in two 9,000-TEU ships with high reefer capacity from Asia, where they had become surplus due to “cascading” following the arrival of larger vessels.

A third high-reefer ship of 8,600 TEU that has been idle in Asia for almost two months is also said to be sailing to Europe shortly.

The three vessels are on the Cape of Good Hope route and are expected to join the new Europe-ECSA service Hapag Lloyd is jointly launching with Mediterranean Shipping Co.

The pool of unemployed classic 4,000- to 5,300-TEU Panamax ships is also shrinking, with some laid-up vessels reactivated to meet extra demand generated by additional Asia-West Africa loops and the upsizing of several regional or feeder loops.

There are, however, some negative signs emerging ahead of the October vacations in China, which traditionally mark the start of the slack winter season, Alphaliner cautioned.

The Asia-Middle East trade is experiencing low capacity utilization of only around 75 percent and ocean carriers’ reluctance to trim capacity on the route has resulted in freight rates crashing by about 50 percent since June.

Demand for charter ships continues to be driven by hefty cargo volumes on longhaul routes, with a positive ripple impact on feeder activity that has reduced the spot pool of smaller tonnage.

Trans-Pacific charter activity is being supported by sustained demand in the United States, while the rising euro is strengthening European demand.

“The extra volumes on deep-sea routes are so far well absorbed by the available tonnage, which is the likely reason for the stagnant spot box rates on most routes,” according to Alphaliner.

The charter market benefits from the ship demand generated by the revival in international trade, “although the rates still fail to impress despite rises for VLCS [very large container ships] and classic Panamaxes.”