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Wednesday, April 4, 2001

SHIPPING ANALYSIS: Drewry: Big Ship Obsession Could Be Diminishing





4 April 2016

SHIPPING ANALYSIS: Drewry: Big Ship Obsession Could Be Diminishing
Image Courtesy: Maersk

The drop in newbuild containership orders could be continued as container shipping companies seem to be running out of profitable trades to deploy their big ships, in turn leading to a decrease in the economic imperative and the financial ability to order new vessel, according to shipping consultancy Drewry.

“Last year was full of records in the container shipping industry, but unfortunately for carriers they were mostly of the unwanted variety. One such record (made by bad by virtue of the second worst ever demand growth) was a record intake of new ships,” Drewry said.

There were 209 new ships that hit the water in 2015, adding some 1.7 million TEU to the fleet before any deductions for scrapping. The average size of newbuild delivered was about 8,400 TEU, while a new maximum record of just under 20,000 TEU was attained.

The three largest carriers in the world – Maersk Line, MSC and CMA CGM – took on the most capacity, in TEU terms rather than the physical number of units, while the five leading carriers, including UASC and Yang Ming, accepted two-thirds of all the new capacity between them.

The emphasis last year was on the big ships; deliveries of 10K+ ships amounted to 55% in TEU terms of all deliveries, according to Drewry.

The majority of the new ships were sent to work in the East-West trades, with Asia-North Europe being the natural habitat for the biggest ships, although Drewry believes that is being challenged with the introduction of 18,000 TEU units in the Asia-WCNA trade.

Drewry added that the intake of newbuilds in 2016 will not be as high as it was in 2015, but there will still be another 1.3 million TEU, mostly in the form of larger ships, that has to be absorbed.

“Looking further into the future carriers will have to continue to juggle new ship capacity with even more dexterity,” Drewry said.

“We think there are reasons that the big ship obsession could be about to end.”

According to a research by Drewry Maritime Advisors, the economic argument for ordering ever bigger ships diminishes as they grow and actually reverses upon reaching 24,000 TEU as ports struggle to turn them around efficiently and the total system cost rises.

“We know that for each individual company the desire for big ships is logical, but the impact on the industry at large has been disastrous with rock-bottom freight rates that we’re seeing now the end result,” Drewry said.

209 new ships hit the water in 2015

SHIPPING ANALYSIS: Drewry: Big Ship Obsession Could Be Diminishing
Image Courtesy: MSC

Source: worldmaritimenews.com

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