Drewry: More ULCVs to Hurt Chances of Supply, Demand Balance

Image Courtesy: MSC

Following a recent spate of ultra large container vessel (ULCV) orders, the addition of any further boxship giants to the orderbook would damage carriers’ chance of reaching a supply and demand balance, shipping consultancy Drewry said.

The current containership orderbook is very top-heavy with ships of 18,000 TEU and above, with almost 50% of all ships scheduled to be delivered by the end of 2020. Based on the current demand outlook that is arguably already more than what is required in the short and medium term.

CMA CGM and Mediterranean Shipping Company (MSC) ordered ULCVs of over 18,000 TEU earlier this year. In its container market outlook webinar last month, Drewry informed that it was unlikely, but not impossible, that other carriers will follow CMA CGM and MSC’s ordering spree.

Since then, China’s Cosco Shipping Holdings announced plans to raise a huge USD 1.9 billion war chest through the issuance of new shares to part fund the purchase of 20 new ships. Under the plan, unveiled in late October 2017, the purchase would include 11 units of over 20,000 TEU and nine in the more modest 13,800-14,500 TEU range.

Furthermore, Korean line Hyundai Merchant Marine (HMM) has denied various reports that it is planning to splurge on as many as 14 vessels of up to 22,000 TEU.

Drewry said that adding the Cosco and possible HMM orders into the current orderbook mix “will only damage carriers’ chance of attaining supply and demand equilibrium.”

Due to the uneven distribution of 18,000 TEU ships by operators and alliance, CMA CGM’s order “made some sense because it helped them play catch up with its nearest rivals,” Drewry said, adding that the any future ULCV orders were expected to come from an operator within an alliance with the fewest of them.

The obvious candidate using those parameters was THE Alliance, comprising of Hapag-Lloyd, Yang Ming and the three Japanese lines (NYK, MOL, and K Line) that will next year merge container operations into the Ocean Network Express (ONE) brand. However, ULCV orders from this group are unlikely because of more limited financial resources, and because nothing in their public utterances suggested any of them would make the splash, Drewry said.

Outside of the Top 20, two carriers to watch out for as potential ULCV buyers because of past expansionist rhetoric are IRISL of Iran and newcomer SM Line from South Korea.

“Companies with the most logical reasons to order ULCVs probably won’t, whereas companies that already have plenty are the most interested in adding to their fleets. The supposed prestige of being the biggest carrier appears to be outweighing economic sense at the moment,” the shipping consultancy concluded.

Share this article

Follow World Maritime News

In Depth>

Events>

<< Nov 2017 >>
MTWTFSS
30 31 1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30 1 2 3

Maritime Information Warfare 2017

Maritime Information Warfare will focus on the growing need for navies to develop their information exploitation capabilities…

read more >

INTERNATIONAL GREEN SHIPPING AND TECHNOLOGY SUMMIT

The Summit will gather key marine experts and companies around the globe which have a big influence in the industry…

read more >

The CWC 18th Annual World LNG Summit & Awards Evening

The CWC World LNG Summit will continue to give you access to premium networking opportunities as it brings together the who’s who…

read more >

Marintec China 2017

The largest maritime event in Asia Pacific, Marintec China connects maritime professionals from the entire shipbuilding supply chain together.

Over the years, Marintec China has grown to reflect the size and importance of the Asian maritime market. 2015 event is another record-breaking edition with the largest exhibition area and the highest number of industry professionals attending ever. The encouraging figures proven that China remains one of the major shipbuilding nations and Marintec China has been the most authoritative platform in Asia.

With the maritime industry facing great opportunities but also many challenges, it is important for the industry to connect and engage more to ultimately win new business in globally-significant markets. A visit to Marintec China is a great way to learn about the latest technology and innovation of the supply industry, a platform for industry professional to meet face to face, make connection and do business.

Marintec China is poised to be the definitive event and is undoubtedly a must-attend for all involved in the maritime industry.

Marintec China will be held from 5 to 8 December 2017 at the Shanghai New International Expo Centre in Shanghai, China and continue its dedication to serve as the “LEADING” platform “CONNECTING” the community and “STRENGTHENING” the maritime industry.

Marintec China offers the perfect opportunity for companies serving the maritime market to showcase their innovations, products and services to a wide audience. A platform for face to face meetings in business, creating new relationships and consolidating existing ones.

More info

read more >