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Monday, April 12, 2021

Maritime Logistics Professional

Unlucky 2013 looms with lay-ups the only option

Posted to Far East Maritime (by on July 19, 2011

Container shipping faces an incredible over supply of capacity that will reach record levels in two years.

We have been over this subject so often, but it remains the greatest obstacle between container shipping lines and their profitability, so here goes again.

Market intelligence outfit Alphaliner reckons deliveries will reach 1.73 million TEUs in 2013, continuing on from the 1.44 million TEU capacity in 2012 and 1.34 million TEUs this year.

As a startled Zulu would say: “Aibo!”

The impressive profitability in the second half of 2010, coming so soon after the financial meltdown put the brakes on trade, has had the unfortunate effect of magnifying the fall in earnings this year.

And there is no peak season to look forward to, either, just more and more capacity floating into service. Many of the vessels will be giant 13,000 TEU rate eroding, yield destroyers, floating around the major trades displacing smaller vessels and struggling to increase utilisation.

Rates restorations have been postponed – they are hardly likely to be accepted in this market, anyway – and any line planning a peak season surcharge on Asia-Europe or the transpacific is living in Harry Potter land.

Alphaliner reckons the problem is that the carriers were too aggressive in re-activating idle capacity. To be fair, trade rebounded so fast that the lines had to make ships available asap, and even then a lot of cargo ended up being rolled at some of the busier hub ports.

But the reactivations came at the same time that carriers reactivated orders that had been put on hold at the shipbuilding yards, much of that comprising vessels of over 10,000 TEUs.

Also, a shortage of ships in the 3,000 TEU mark saw extra slow steaming easing off, says Alphaliner. This immediately made more vessels available that would have been tied up in the slow moving strings.

So with no peak season expected and too many large ships hitting the water, the only option left for embattled line executives is to settle back into their genuine leather chairs, glug the last of the Chivas Regal and send ships to lay-up with no dinner.

With over supply of vessels and demand predicted to remain sluggish, what other options are available?

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