Too many ships, too little to put in them
The number of vessels with a capacity greater than 10,000 TEU that will be delivered between now and December next year has reached epic proportions.
A total of 63 of the giant box boats are due for delivery over the next 12 months, and because of their size and draught constraints they will need to be deployed on Asia-Europe.
According to market intelligence provider Alphaliner, only four services have been withdrawn from the trade as the business enters the slack winter season, with the AEX2/CES2 the latest that will take 8,500 TEUs per week out of the sector.
This still leaves the trade over served by capacity and under served by demand. Alphaliner also ironically points out that Maersk, by far the biggest operator on the trade – and the world, of course – will not be receiving any vessel of over 10,000 TEUs next year and will have to watch as the others vigorously chase after market share.
Alphaliner calls it a “war of attrition” with freight rates now at a negative US$215 per TEU with only a mild recovery forecast before the busy Chinese New Year period at the end of January. Load factors have stuck below 90 percent for the whole year.
Speaking of Maersk, the world’s largest line is targeting the Asia-South America trade and has 16 7,500 TEU ships arriving between this year and 2013, according to the South China Morning Post.
That is good news for importers in Latin America, but the ships will be returning with plenty of empties because of the imbalance in trade. This could change in time, however, because of the rapidly rising demand for perishables in China. South American fruit, beef, chicken and wine are a hit on the mainland and the market is growing at 20 percent a year. Because of the demand for perishables, Maersk will be installing 1,700 reefer plugs on each of the new ships, which is apparently about double the amount usually on a comparatively sized vessel.
With the major trades overrun with capacity, the carriers are all turning their attention to secondary routes covering developing countries in South America and Africa. Unfortunately, the growth percentages flatter the actual volume of containers, and as larger ships cascade down after being displaced on the east-west routes by the 10K-plus vessels, the boxes will be spread even thinner.
It’s all about finding a new market, getting services running asap and trying to build strong brand loyalty before the competition arrives and starts slashing prices.