Asia-Europe box ship capacity to rise 23pc by end of 2019
CONTAINERSHIPS scheduled for delivery between this August and the end of 2019 have a combined capacity of 1.4 million TEU and are larger than 14,000 TEU, according to analyst SeaIntel.
Over the next two years 78 new megaships will be phased into the Asia-Europe trade, raising capacity by 23.2 per cent, while threatening to unsettle the positive supply-demand balance that has markedly improved the profitability of container shipping lines in the first six months of this year.
In the fourth quarter of 2017 alone, SeaIntel said capacity on Asia-Europe will increase by 12 per cent, which will prompt the carriers to blank a significant number of sailings to maintain a balance between supply and demand, reported IHS Media.
"This level of capacity injection is poised to exceed demand growth, leading to only two possible outcomes. One is a sharp reduction in vessel utilisation for the carriers - in turn leading to a high risk of sharply falling freight rates. The other is a resumption of blank sailings," the analyst was cited as stating in its Sunday Spotlight.
"Looking at the carriers' actions in recent years, it is our assessment that they will re-introduce blank sailings in an attempt to stave off a reduction in rate levels. If they proceed down this path, shippers should prepare themselves for a reduction in service integrity to a level on par with the beginning of 2016."
According to IHS Markit data, the bulk of ship deliveries in all trades are due before 2019 and are heavily skewed at the top end of the range with 18,000-plus-TEU ships that have very limited deployment options, accounting for 40 per cent of the orders. Seventeen vessels amounting to 350,000 TEU are set to be delivered this year, and another 22 mega-ships are scheduled for delivery in 2018.