CONTAINER demand needs to grow in the third and fourth quarter for the full year to balance out between supply and demand growth, according to BIMCO.
Boxship overcapacity cripples effect of positive demand growth: BIMCO CONTAINER demand needs to grow in the third and fourth quarter for the full year to balance out between supply and demand growth, according to BIMCO. But demand has been slow in the first half. Part of the idle fleet has been reactivated and the number of new ships arriving has surpassed the number being scrapped, reports Rotterdam's World Maritime News. Overall container demand rose two per cent in second quarter over the same period last year. In the key trade lanes into Europe, mainly from East Asia, demand was up by 1.4 per cent in the first five months of the year. The weak demand growth in Europe impacted spot freight rates on the transatlantic, but more importantly hit services out of Shanghai, which was hit hard during the first four months of 2016. Since then successive general rate increases have lifted freight rates above the US$1,000 per TEU mark after hitting an all-time low during March and April where rates hovered around $250 per TEU. "Unfortunately, the effect of a positive demand growth has been crippled by carriers deploying too much tonnage into the trade lanes," said BIMCO. In the first eight months of the year the total fleet increased by 1.5 per cent year on year, as 85 units with a combined capacity of 598,000 TEU were delivered, while 92 units representing 303,000 TEU left the fleet to be demolished. The global container shipping fleet now stands 20 million TEU. Due to this high pace in demolition activity, BIMCO estimates ships accounting for 400,000 TEU will be demolished this year. According to Alphaliner, the idle fleet totalled 1.01 million TEU by August 8, while 91 per cent of the idled capacity was of ships below 7,500 TEU, controlled by non-operating owners.