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Muted growth in global box ship fleet's capacity in August

CHINA's Cosco Shipping is not looking to develop 25,000-TEU ships and plans to expand its fleet only in line with market growth, according to vice-president Wang Haimin

Muted growth in global box ship fleet's capacity in August

CHINA's Cosco Shipping is not looking to develop 25,000-TEU ships and plans to expand its fleet only in line with market growth, according to vice-president Wang Haimin

05 September 2019 - 19:00

CHINA's Cosco Shipping is not looking to develop 25,000-TEU ships and plans to expand its fleet only in line with market growth, according to vice-president Wang Haimin.

Reports had circulated earlier this year that Cosco was studying the viability of building 25,000 TEU ships, sparking concerns that even more capacity would be injected into an over-tonnaged container segment at a time of slowing growth, reported London's Lloyd's List.



Having not ordered any new vessels since 2016, Cosco's focus would be on 'organic growth,' Mr Wang said. The carrier has expanded rapidly over the past few years, through mergers and the acquisition of Orient Overseas Container Lines, to become the world's third-largest container shipping line by capacity.



Cosco's caution in ordering, like that of the world's leading ocean liner, Maersk, suggests that the container industry has learnt some of the lessons from the first half of this decade, when overordering was raging.



According to data from Lloyd's List Intelligence, the global containership fleet stood at 22.2 million TEU at the end of August, after just four ships were added, comprising 52,630 TEU.



Only one mega box ship was reported entering service during August, the 23,656 TEU MSC Isabella, part of Mediterranean Shipping Company's series of 24-row box ships that hold the current capacity record.



While the low level of deliveries will have helped keep supply in balance with demand, and there were no confirmed orders reported, more ships are on the way.



Last month Taiwan's Evergreen announced that it was seeking to expand its fleet by 11 ships with a US$1.8 billion expansion plan. The carrier said that it wanted to order five to six 23,000-TEU newbuildings from shipyards and would add another four to five units of the same size through chartering.



In spite of these additions to the fleet, analysts at MSI predict that there will be a 'gradual easing' of supply-side pressure over the next few months, with scrapping being the determining factor.



'As vessel earnings are the primary determinant of scrapping volumes, alongside one-for-one fleet renewal demolitions pursued by liner companies, the current hearth of the time charter market for larger scrap candidates, essentially the 4,000-TEU to 6,000-TEU fleet, suggests limited potential for a surge in scrapping volumes,' MSI said.



'In the three months to October we expect 55,000 TEU of demolitions, followed by 90,000 TEU in the three months to January.'


WORLD SHIPPING

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