Alphaliner: Boxship Oversupply Will Not End Soon

Image Courtesy: MSC

With weaker demand in the fourth quarter and a steady stream of new vessel deliveries, the supply overhang of surplus containerships is not expected to end soon, according to Alphaliner.

As a further 1.6 million TEU of new ships are due to be delivered in 2018, the overall capacity increase is unlikely to be absorbed by the end of 2018, given the absence of a significant surge in scrapping.

Additionally, the deliveries are expected to push the idle vessel capacity to 0.8 million TEU by the end of the year.

Based on Alphaliner’s current projections, the idle containership fleet will only be eliminated in the third quarter of 2019, taking over 10 years to fully clear out the supply overhang that has plagued the container shipping market since 2009.

A potential wave of new orders, stimulated by the announcements over the past two weeks of a total of 20 ships of 22,000 TEU contracted by French carrier CMA CGM and Swiss-based Mediterranean Shipping Company (MSC) with deliveries starting from the second half of 2019, could further extend the supply overhang.

“These new ships would bring the latest technologies aimed at reducing the energy consumption bills when the new low sulphur fuel rules are implemented in 2020, triggering a cascading that would make redundant smaller, older ships,” Alphaliner said.

“Much will depend on the pace of demand growth over the next two years, which will have a significant impact on how quickly the persistent over-supply can be eliminated.”

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