THE race to introduce bigger, more efficient ships with lower slot costs has created a vicious circle owners ordering more vessels than the supply and demand equation requires.
In June, an additional 171,000 TEU were added to the fleet at the same time as spot rates on all the major trade lanes fell so low that carriers were almost paying shippers to move their containers.
While July general rate increases (GRI) have offered some sign of relief, the outlook still looks grim, says Lloyd's Loading List.
To reverse this the large shipping alliances are reducing capacity, particularly on the main east-west route between Asia and Europe. Maersk and MSC are using smaller vessels, the Ocean Three has combined services and the G6 alliance is voiding sailings to take capacity out of the market.
So why order more ships when they can't even use the ones they have? The answer lies in the individual lines' requirement to create efficiencies and replace older, less flexible tonnage with new vessels that can reduce slot costs. But until they run fully loaded, the efficiencies do not exist.
Over the past month, Cosco has been rumoured to be joining the ordering spree, with an unconfirmed report that the company is close to signing a deal for nine 20,000-TEU box ships, including an option for four more, at three Chinese shipyards: Shanghai Waigaoqiao Shipbuilding, Nantong Cosco KHI Ship Engineering and Dalian Shipbuilding.
Maersk Broker said each vessel was priced at around US$150 million, and scheduled for delivery in the second half of 2017.
This follows close on the heels of Maersk Line's confirmation in May of a deal for up to 17 vessels of 19,630 TEU at Daewoo Shipbuilding & Marine Engineering.
Other deliveries in June included MSC Zoe, which joins sister ships MSC Oscar and MSC Oliver as the largest ships in service, for now.
WORLD SHIPPING
26 July 2015 - 20:07
Global fleet in June boosted by 171,000 TEU - worsening supply imbalance
THE race to introduce bigger, more efficient ships with lower slot costs has created a vicious circle owners ordering more vessels than the supply and demand equation requires.
WORLD SHIPPING
26 July 2015 - 20:07
Global fleet in June boosted by 171,000 TEU - worsening supply imbalance
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