As shipowners continue to lay up containerships as the market slows, the size of the idle fleet is expected to get bigger while rates and profits slide, UK-based shipping consultant Drewry said.
To lay-up or not to lay-up, that is the question owners of containerships will be asking themselves during the fourth quarter as demand for their assets wanes. More and more, Drewry expects, it will be answered in the affirmative.
“As in 2009, carriers have waited too long to employ the idle fleet tactic, but now that they have, we expect them to be less severe than before, but to stick with it for longer to off-set the constant influx of newbuild deliveries,” Drewry said.
The idle containership fleet has reached its highest level in five years, with over 1 million TEU of vessel capacity currently unemployed, according to Alphaliner.
The size of the idle containership fleet swelled by 52% from October to November, driven by more of the bigger class of ships being laid up.
Drewry counted a total of 31 inactive ships of 8,000 TEU or above as of 16 November, including the 18,000 TEU Triple-E Morten Maersk.
The idle fleet now accounts for 4.6% of the world’s total, which is still some way off the peak of around 11% seen at the end of 2009.
The idling of such big assets is not done lightly, but the growing size of this sector shows that carriers have understood that slow steaming and missed sailings are insufficient on their own to address the problem of overcapacity in the US East-West trades.
As mentioned previously, the idle fleet peaked in 2009 when as much as 1.4 million TEU worth of ship capacity was laid up.
Drewry said that the large-scale idling seen in 2009 was a response to a collapse in demand caused by the global financial crisis, whereas today’s problems are more self-induced. Container traffic is currently still growing at least, albeit anaemically, but the real problem today is the huge additions to the containership fleet that have seen supply outstrip demand in each of the last four years.
With more big ships being ordered Drewry is currently forecasting that the industry will have to endure at least a couple of years of overcapacity. With demand expected to rise only modestly over this period, carriers will have to stick with idling for longer in order to balance things up.