Sharp Decline in Idling Boxships

Illustration; Image Courtesy: UASC

As of 3 April 2017, the idle container shipping fleet stood at 0.97 million TEU, according to Alphaliner’s data, totaling in 4.8 percent of the total fleet.

The major plunge from close to 1.6 million TEU at the start of the year is evident across the boxship fleet sizes.

Most significantly, the 3,000-6,000 TEU segment had 130 idle units’ half a year ago, which had become 58 units by early April.

The reduction in idling containerships has been driven by the roll-out of new alliances’ networks, Alphaliner said, adding that with reduced availability of spot tonnage, charter market is kept upbeat.

The container shipping industry is expected to continuously optimise networks and make them more efficient, as noted by BIMCO in its Shipping Market Outlook for the sector.

“Cutting costs where it’s still possible and making the most of the fleet available remains essential to reaping the benefit of the individual alliance members,” BIMCO said.

Above all, the implementation of new alliances remains the one thing to watch carefully in 2017. The three alliances, which replaced the previous four, control 77% of global container ship capacity and as much as 96% of all east-west trades.

“Before getting carried away, we should remember that 57% of all demand, as measured by TEU miles, is generated by non-east-west trades – trades that are particularly impacted by the recent years’ cascading of tonnage from the east-west trades. Another two-tier market is in the making,” BIMCO stressed.

On the supply side, only eight ships have been ordered, all at Chinese shipyards and small (1,750-2,150 TEU). The order book still contains 3 million TEU that is yet to be delivered, of which 86% is scheduled for delivery in 2017 and 2018. 80% of the capacity scheduled for delivery in 2017 will come in the form of 9,400+ TEU ships. The cascading of ships onto alternative trades will thus continue at an unchanged pace.

“BIMCO expects the container ship fleet to grow by 2.9% in 2017, under the assumptions that 450,000 TEU will be demolished and 1 million TEU will be delivered. For that to happen, the current demolition interest must cool somewhat and the delivery pace must pick up,” the association added.

As explained, currently the fleet is getting smaller by the day, as 152,800 TEU has been delivered in 2017, offset by as much as 195,555 TEU being sold for demolition, resulting in a smaller fleet than it was at the start of the year.

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