The orderbook for small containerships has been notably thin for the last few years. Yet cascading activity driven by a surplus of larger units has prolonged overcapacity, driven vessels into lay-up and supressed charter market earnings. But with intra-regional volumes still forging ahead is there a potential capacity gap looming in the sub-3,000 TEU sector?
How Thin Is Thin? The orderbook as a share of existing fleet capacity is under 10% for every sub-sector below 3,000 TEU, asshown by the Graph of the Month. In comparison, the orderbook for Post-Panamax containerships is equivalent to 38% of the Post-Panamax fleet. Indeed, in the very large sizes, the 1.7m TEU of 12,000+ TEU tonnage on order is equivalent to 81% of the existing 12,000+ TEU fleet.Contracting in the small size sectors remained subdued in 2013.
Just two ships of 100-999 TEU were ordered, while in the 1-2,999 TEU sector 62 contracts were placed for a combined 0.11m TEU. This included 38 orders for vessels of 1-1,999 TEU, and contracts for 24 ships of 2-2,999 TEU. Overall, below 3,000 TEU, substantially more capacity was demolished than was ordered.Slimming DownLast year, 32 ships below 1,000 TEU were scrapped, with a combined capacity of 17,542 TEU.
Mean-while, in the 1-1,999 TEU size range, 63 boxships totalling 0.9m TEU were sold for demolition, while 20 ships in the 2-2,999 TEU size range were sent to the beaches. Overall, 0.16m TEU sub-3,000 TEU capacity was scrapped last year, while just 71,348 TEU was delivered. However, the shrinking fleet in the smaller sizes is not a new phenomenon. The capacity of the sub-3,000 TEU fleet peaked in December 2008 at 4.4m TEU, and has since fallen by 5.6%. The contraction is even more stark in some sub-sectors: at the start of February 2014 the 2-2,499 TEU fleet was 15% smaller than at its peak, while the sub-1,000 TEU fleet was 8% smaller.
The graph shows the percentage contraction since the peak fleet capacity in each sub-sector.Older and Thinner?The average age of the sub-3,000 TEU fleet is 13.1 years, while the average age of the Post-Panamax fleet is a relatively youthful 6.3 years. 15% of sub-3,000 TEU ships are over 20 years old, while 8% are over 25 years old.
There is clearly scope for further scrapping in the short-term. Indeed, 68 sub-3,000 TEU ships younger than 25 were scrapped last year, of which 38 were less than 20.There are signals that cascading is slowing in the smaller sizes. Upsizing on intra-Asian trades in particular decelerated in 2H 2013. As intra-regional trade continues to grow, and the sub-3,000 TEU fleet continues to shrink on the back of limited additions and continued scrapping, prospects of tighter fundamental conditions may eventually start to provide more than slim rations for smaller containerships.
How Thin Is Thin? The orderbook as a share of existing fleet capacity is under 10% for every sub-sector below 3,000 TEU, asshown by the Graph of the Month. In comparison, the orderbook for Post-Panamax containerships is equivalent to 38% of the Post-Panamax fleet. Indeed, in the very large sizes, the 1.7m TEU of 12,000+ TEU tonnage on order is equivalent to 81% of the existing 12,000+ TEU fleet.Contracting in the small size sectors remained subdued in 2013.
Just two ships of 100-999 TEU were ordered, while in the 1-2,999 TEU sector 62 contracts were placed for a combined 0.11m TEU. This included 38 orders for vessels of 1-1,999 TEU, and contracts for 24 ships of 2-2,999 TEU. Overall, below 3,000 TEU, substantially more capacity was demolished than was ordered.Slimming DownLast year, 32 ships below 1,000 TEU were scrapped, with a combined capacity of 17,542 TEU.
Mean-while, in the 1-1,999 TEU size range, 63 boxships totalling 0.9m TEU were sold for demolition, while 20 ships in the 2-2,999 TEU size range were sent to the beaches. Overall, 0.16m TEU sub-3,000 TEU capacity was scrapped last year, while just 71,348 TEU was delivered. However, the shrinking fleet in the smaller sizes is not a new phenomenon. The capacity of the sub-3,000 TEU fleet peaked in December 2008 at 4.4m TEU, and has since fallen by 5.6%. The contraction is even more stark in some sub-sectors: at the start of February 2014 the 2-2,499 TEU fleet was 15% smaller than at its peak, while the sub-1,000 TEU fleet was 8% smaller.
The graph shows the percentage contraction since the peak fleet capacity in each sub-sector.Older and Thinner?The average age of the sub-3,000 TEU fleet is 13.1 years, while the average age of the Post-Panamax fleet is a relatively youthful 6.3 years. 15% of sub-3,000 TEU ships are over 20 years old, while 8% are over 25 years old.
There is clearly scope for further scrapping in the short-term. Indeed, 68 sub-3,000 TEU ships younger than 25 were scrapped last year, of which 38 were less than 20.There are signals that cascading is slowing in the smaller sizes. Upsizing on intra-Asian trades in particular decelerated in 2H 2013. As intra-regional trade continues to grow, and the sub-3,000 TEU fleet continues to shrink on the back of limited additions and continued scrapping, prospects of tighter fundamental conditions may eventually start to provide more than slim rations for smaller containerships.