ONE hundred more panamax ships need to be added to the 50 scrapped since the expanded Panama Canal opened in June if a start is to be made on the rebalancing supply and demand in container shipping, says Paris research house Alphaliner.
"Only such a drastic reduction can elevate [charter] rates from their current all-time low of US$4,200 to $4,500 per day," said Alphaliner.
So far, 120 panamax ships of 4,000- to 5,300 TEU have been removed from the Asia-US all-water trade to the east and Gulf Coast ports.
Alphaliner said a further 30 to 40 panamaxes will be removed from the trade over the next couple of months, idling 150 to 160 units by the end of the first quarter of 2017.
Non-operating owners are suffering the most as carriers redeliver chartered vessels at an ever faster pace, to the point where it forms the bulk of the idle tonnage in the panamax range.
Many cash-strapped owners can't afford the survey-related costs, and the vessels are instead being laid up, sold for scrap, or sold to bargain buyers at distressed prices, Alphaliner said.
Owners might also be tempted to wait for an increase in scrap prices, which currently hover at only $300 per ton, compared with more than $500 in 2008 and 2011.
Alphaliner said the structure of the classic panamax fleet currently led to a paradoxical situation: while non-operating owners have many idle panamaxes, carriers kept them as candidates for scrap.
"As an illustration, 68 of the 78 maxi-panamaxes aged 14 years and over are either owned or long-term chartered by carriers, whereas only 10 such vessels are traded by non-operating owners on the liquid market. Of the 23 handy panamaxes (258 metres to 272 metres) aged 14 years and over, only 10 are controlled by carriers," the analyst said.
A possible solution for carriers reluctant to scrap older maxi-panamaxes, Alphaliner said, would be to swap them for younger and more economic panamaxes, purchased at competitive prices from the non-operating owners in "buy & scrap" schemes.
"For the moment though, this suggestion is bound to hit a wall as carriers benefit from the ultra cheap charter rates that the ship overhang causes. Shipping lines are, therefore, in no hurry to enter into any such schemes," said Alphaliner.