NEWBUILDING deliveries in 2025 will double the capacity overhang even following the absorption of capacity following the Red Sea diversions, according to shipbroker Braemar.
In its latest market report Braemar said that it had expected 2024 overcapacity to reach 12-13 per cent in this year, up from around 9 per cent in 2023, but the Red Sea diversions quickly put paid to that projection, reports UK's Seatrade Maritime News.
'In 2024 overcapacity was significantly suppressed, despite significant fleet growth. We estimate vessel overcapacity in 2024 will be in the region 3-4 per cent,' said the Braemar report, written by researcher Jonathan Roach.
'Despite underlying overcapacity, the high level of uncertainty surrounding Cape of Good Hope transits has understandably enticed a surge in newbuilding investment in 2024,' he added.
In 2025 the deliveries of new vessels will again raise the capacity oversupply, said Braemar, 'even allowing for Red Sea avoidance, oversupply is expected to increase from 3-4 per cent in 2024 to 7-8 per cent in 2025,' said the broker.
Estimates of the actual amount of capacity set to be delivered varies, but to Dynamar analyst Darron Wadey puts the number at around 220 vessels are scheduled to be delivered totalling around 1.9 million TEU, representing a vessel growth rate of 3 per cent, but a capacity increase, without scrapping, of 6 per cent.
'It is unlikely that demand will grow at anything like the same rate as the 6 per cent capacity,' said Mr Wadey.
He also highlights that uncertainty with the supply and demand equation has 'luckily kept in check' by the diversion of vessels around the African Cape, rather than transiting the Red Sea and Suez.
'Should that situation resolve itself, what are we to do with all those ships suddenly surplus to requirements that are already on the water?' asks Mr Wadey, 'And then, what are we to do with all those ships that are scheduled to come? Organic demand will come nowhere near enough to fill the freed up and new capacity.'
SeaNews Turkey
In its latest market report Braemar said that it had expected 2024 overcapacity to reach 12-13 per cent in this year, up from around 9 per cent in 2023, but the Red Sea diversions quickly put paid to that projection, reports UK's Seatrade Maritime News.
'In 2024 overcapacity was significantly suppressed, despite significant fleet growth. We estimate vessel overcapacity in 2024 will be in the region 3-4 per cent,' said the Braemar report, written by researcher Jonathan Roach.
'Despite underlying overcapacity, the high level of uncertainty surrounding Cape of Good Hope transits has understandably enticed a surge in newbuilding investment in 2024,' he added.
In 2025 the deliveries of new vessels will again raise the capacity oversupply, said Braemar, 'even allowing for Red Sea avoidance, oversupply is expected to increase from 3-4 per cent in 2024 to 7-8 per cent in 2025,' said the broker.
Estimates of the actual amount of capacity set to be delivered varies, but to Dynamar analyst Darron Wadey puts the number at around 220 vessels are scheduled to be delivered totalling around 1.9 million TEU, representing a vessel growth rate of 3 per cent, but a capacity increase, without scrapping, of 6 per cent.
'It is unlikely that demand will grow at anything like the same rate as the 6 per cent capacity,' said Mr Wadey.
He also highlights that uncertainty with the supply and demand equation has 'luckily kept in check' by the diversion of vessels around the African Cape, rather than transiting the Red Sea and Suez.
'Should that situation resolve itself, what are we to do with all those ships suddenly surplus to requirements that are already on the water?' asks Mr Wadey, 'And then, what are we to do with all those ships that are scheduled to come? Organic demand will come nowhere near enough to fill the freed up and new capacity.'
SeaNews Turkey
