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Increased tonnage afloat will result in rate slide, says Alphaliner

SOME 313 containerships, or 1,555,959 TEU, remained laid-up as of July 20, representing 6

05 August 2020 - 19:00

SOME 313 containerships, or 1,555,959 TEU, remained laid-up as of July 20, representing 6.6 per cent of cellular capacity worldwide, reports Alphaliner, representing an increase in reactivation of one million TEU in one month.

As carriers bring more ships back into operations rates are beginning to come under pressure, noted Singapore's Splash 247. Oslo-based platform Xeneta warned rates are showing signs of weakening.



At its peak, as liners fought to prop up rates by slashing capacity, the inactive boxship fleet hit a record 2.72 million TEU in late May, noted Singapore's Splash 247.



Alphaliner warned that the latest 1.56 million TEU figure remains high for this time of the year, given that the peak season is meant to be in full swing.



Carriers face a difficult decision: keep reintroducing tonnage and try and gain market share, yet undermine rates, or withhold services and keep propping them up?



'One has to go back 11 years ago, on 20 July 2009, to find higher figures in relative terms, when 10 per cent of the fleet lied idle in the context of the financial crisis,' Alphaliner said.



Most of the Pacific International Lines (PIL) ships that were still lying idle at the beginning of the month have now resumed work in the wake of the financial support received from Heliconia Capital Management, a subsidiary of the Singapore government's Temasek Holdings.



Said Xeneta CEO Patrik Berglund: 'Spot rates have finally begun to slide on key Far East - North Europe and Far East - US West Coast trades, suggesting the recent reinstatement of routes and tonnage is driving down prices.



'That's obviously a concern for carriers who face a difficult decision: keep reintroducing tonnage and try and gain market share, yet undermine rates, or withhold services and keep propping them up?' he said.


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