The global containership fleet made idle this year is set to reach a new record, surpassing the 1.5m TEU mark set in December 2009, according to Maritime Strategies International.
As of November, 1.4m TEU was idle, having increased 760,000 TEU in two weeks amid depressed freight rates.
What is more, more carriers are expected to layup tonnage paving way for a slight improvement in container shipping freight rates in 2016, however; service withdrawals and reduced demand are expected to negatively impact the vessel charter market as vessel availability rises, MSI said.
Container freight rates continued their decline in November, with the Shanghai Containerised Freight Index falling by 8%. At the same time, the lines’ attempts to improve earnings with the use of general rate increases (GRIs) produced mixed results.
A long-term solution can only be provided by a reduction in capacity on the water, according to MSI’s Senior Analyst James Frew.
“Despite the seemingly endless gloom that surrounds the container industry, MSI believes a limited upturn is possible in 2016 as further sailings are removed and idle capacity increases. However, our forecasts are certainly modest and given the degree of oversupply, no meaningful increase in rates will be achieved until more capacity is removed or trade growth picks up,” he adds.
Spot rates on the key Asia-Europe route were USD 488/teu in November and MSI forecasts an increase to USD 684/teu in February and a slight fall to USD 656/teu in May. Transpacific rates should be maintained into the second quarter of 2016 with November levels of USD 1,238/FEU predicted to fall to USD 1,114/FEU in February before recovering to USD 1,203/FEU in May.
Meanwhile, what began as a small decline in timecharter rates has turned into a six-month rout, with MSI’s T/C Index witnessing a 7% decline to 88.5 in November.
Though an improvement on the previous month’s 23% decrease, it is still indicative of a market that is feeling the effects of significantly reduced global container demand. The MSI T/C Index is forecast to rise to 93.2 in February 2016, and 120.9 in May 2016, based on MSI’s data.