[300117.EN.BIZ] Container Shipping Industry Recovery Is Threatened By Newbuild Deliveries

LONDON's Drewry Maritime Research is warning that the large amount of new tonnage to be delivered this year poses the biggest threat to the recovery of the container shipping.

"We are more optimistic than we have been in a long while as demand will continue to make small, incremental gains and freight rates will rebound after last year's nadir," Drewry commented in its weekly report on the container market.

"However, we also identified the biggest risk to that outlook as the huge number of ship deliveries, particularly at the top end of the scale."

Barring delivery delays, up to 1.7 million TEU of newbuildings will join the global container shipping fleet this year, more than half of these over 14,000 TEU, meaning most will operate on the Asia-Europe route.

Vessels currently plying this trade will consequently be cascaded into other trades such as the transpacific and Asia-Mediterranean, and in turn smaller vessels on those trades will need to find new homes or be laid-up. The flood of capacity onto the secondary trades puts improvements in rates at risk.

Capacity rose by seven per cent on the Asia - east coast South America trades, yet demand is down by 20 per cent. Drewry said that while utilisation was up slightly on the east - west trades, and as a result boosting rates, the pain was merely being passed along to the north - south trades.

"These trades are the victims of the fact there is simply nowhere else to put the cascaded east-west ships and until they recover the demand strength carriers will either have to accept poor returns on freight rates or park more ships," Alphaliner added.

Source : HKSG.