Drewry: New Tonnage the Biggest Risk for Industry Recovery

Image Courtesy: Maersk Line

One of the key performance indicators that needs to be ticked off before the containership industry recovery gets back on solid ground is when the industry does not have to squeeze ships into trades that are not equipped to handle them.

“We are more optimistic than we have been in a long while as demand will continue to make small, incremental gains and freight rates will rebound after last year’s nadir. However, we also identified the biggest risk to that outlook as the huge number of ship deliveries, particularly at the top end of the scale,” Drewry informed.

This year the industry will have to make room for as much as 1.7 million TEU of newbuilds, if none slip into next year, with over half being 14,000 TEU or above.

Topper most of the recipients will be the world’s three largest carriers, the Danish giant Maersk, Swiss Mediterranean Shipping Company (MSC) and French CMA CGM, which suggests they will further extend their lead over their peers in the top 5.

Drewry said that because most of the big ships will go straight into the Asia-North Europe market they will push out smaller units into secondary routes such as Asia-Mediterranean, Transpacific and the Asia to Mid-East routes. Then the cascade continues as ships in those routes have to find a new home or potentially be laid up.

Average ship sizes have increased faster than demand on most of the East-West trades with the exception of the westbound Transatlantic. A 22% jump in the size of vessels serving Asia to East Coast North America is entirely linked with the widening of the Panama Canal last summer but the disparity with demand growth does mean that carriers have had to make a trade off by reducing the number of services.

Additionally, the North-South trades have almost universally suffered from weak demand on headhaul legs and are not in a position to absorb too much additional capacity.

“These trades are the victims of the fact there is simply nowhere else to put the cascaded East-West ships and until they recover the demand strength carriers will either have to accept poor returns on freight rates or park more ships,” Drewry said.

Share this article

Follow World Maritime News

In Depth>

Events>

<< Jun 2017 >>
MTWTFSS
29 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

DSM17

Donsö Shipping Meet 2017 is an all inclusive exhibition. Meals, electricity, meeting schedule and banquette dinner is included…

read more >

TOC Europe

TOC (The Terminal Operations Conference) has long been considered best in class by container terminal operators and their suppliers…

read more >

Marine Philippines 2017

The 4th edition of PHILIPPINES MARINE 2017, SHIPBUILD PHILIPPINES 2017 and OFFSHORE PHILIPPINES 2017 is the only specialized Shipbuilding…

read more >

Bunkering Week 2017

IBC’s biennial Bunkering Week is back with its successful series of 3 co-located events: 8th Bunkering in Asia, 4th LNG Bunkering and EMTECH: Ship Emissions Technology Conference.

With a proven track record of bringing together top decision makers from various industry sectors, this remains the go to event for ship owners, fuel suppliers, traders and technology solution providers. Get in-depth and detailed market insights from experts who are taking the decisions, assess peer strategies and give shape to your own in this unrivalled gathering of shipping and marine fuel industry leaders.

Key Highlights for 2017:

* 3 Co-located Conferences

* 12+ Hours of Networking Time

* In-depth Review of Shipping Markets by Segment

* Ship Owner Positions on Emissions Compliance Scenarios

* Pricing Differentials and Availability across Different Fuels

* Technology and Analytics in Fuel Management and Emissions MRV

More info

read more >