Growing overcapacity is causing an increase in the idle containership fleet across all ship sizes and apparently in all seasons and, according to shipping consultancy Drewry, it is likely that some of the newly idled ships will be sold for demolition, particularly the older Panamax vessels.
Increased idling of boxships has happened on a larger scale, Drewry said, as the consultancy found that over 300 containerships, with a combined capacity of over 800,000 TEU, were idle in early July, supposedly the start of the Asian export peak season, while in July of the two previous years, less than a quarter of this capacity was idled.
There are several factors which could have influenced these market developments.
Namely, the peak season in the transpacific is rather weak with a combination of low freight rates and muted demand which “must have played a part in the unusual decision of carriers to lay up ships in July,” Drewry said. Furthermore, there are speculations that carriers are trying not only to park unused capacity but also to bring spot rates back up by increasing load factors on remaining active ships.
Idle ships of 3,000-5,000 TEU and 5,000-8,000 TEU have become considerably more common than in the past two years, while there are only five very large idle ships of 13,000 TEU.
As deliveries of new ships continue, carriers are starting to run out of options in how to deploy even their largest ships in today’s oversupplied market.
An increasing number of Panamax ships with capacities of about 4,500-5,000 TEU are now idle, following the opening of the expanded Panama Canal, while even the smaller ship segment of less than 3,000 TEU is seeing a trend towards inactivity.
As a percentage of the global fleet, the idle fleet this peak season represents about 4%, despite the increase in demolitions, up from just 1% this time last year, which “does not bode well for asset utilisation during the slow season,” according to Drewry.