LONDON: Sustained cargo volumes on the Asia-Europe trade were being largely absorbed by the current fleet and the ongoing ultra large containership deliveries. Newbuilds of 14,000-21,000 TEU would continue to enter the Asia-Europe market throughout the summer.
However, Alphaliner warned that the steady flow of ultra-large vessels into service at the rate of one per week will continue to put pressure on the supply-demand balance.
During the first half of the year, 26 ships of more than 14,000 TEU were delivered, and a further dozen newbuildings of this size are expected to join the containership fleet at a rate of at least one a week before the annual low season begins in October.
Fortunately for carriers, the onslaught of very large and ultra large ship deliveries coincided with a cargo rally and the onset of the peak season just as the new east-west carrier alliances were being launched in April.
Service contracts on Asia-Europe, settled at significantly higher levels than those negotiated in 2016, and more disciplined capacity management has ensured higher levels of profitability for container lines. Carriers on the trade are forecast to gain US$1.2 to $1.7 billion in higher rate levels for full-year 2017 While containership demand has been resilient so far this year, it has not been strong enough to overcome the supply overhang that continues to weigh down on charter rates.
Alphaliner said current rates are only profitable for those non-operating owners that bought tonnage at distressed prices from bankrupted or ailing companies. Owners that were carrying the full capital costs of newbuildings, especially those contracted at the peak of the market in 2005-08, were suffering massive losses.
“Non-operating owners continue to bear the brunt of the overcapacity and the current newbuilding overhang still delays a re-balancing of ship supply and demand," Alphaliner noted. "Even a relatively robust vessel demand in the coming months, with only a mild retreat for the winter slack season, will not prevent a rise in idle capacity."