Drewry: Large Containership Orders May Ruin Recovery


Sustainable ocean carrier profitability may be lost if CMA CGM’s order for nine 22,000 TEU ships goes ahead, according to Drewry's latest Container Insight Weekly.  

The over-supplied container shipping sector, which recently surpassed a global fleet capacity of 20 million TEU, may be tipped over the edge if companies start playing catch-up with large vessel orders.

Drewry's graph (below) shows which carriers will be adding most to the 3 million TEU increase at the end of 2020, with nearly 40% of new deliveries in the 18,000-plus TEU range arriving in 2019.

However, a lot could change during that time as the Cosco-OOCL acquisition deal and Ocean Network Express merger both need regulatory approval from competition authorities.

Drewry stated: “Adding even more ships to this top-heavy pool will make the task of deployment and cascading harder than it already is.

“How much damage these ships might do to the supply and demand balance will depend on the prevailing conditions at the time of their delivery.

“We assume they will arrive after 2019 when the order book will have mostly played out, while increasing cargo flows and greater scraping could also mitigate their impact.

“Yet, while these ships on their own will not significantly alter the supply-demand dynamics, it will become more of a problem for the industry if herd mentality kicks in and others follow.”

CMA CGM's unconfirmed order has also suggested that some carriers are growing market share in response to the recent trend in companies paying off debt.

Drewry concluded: “As compelling as the individual case may be, no carrier operates in a bubble and should this order become reality there could well be some hidden costs that CMA CGM and all of its cohorts will have to bear.

“From an industry perspective, there is simply no good reason to add these ships to already overcrowded oceans.”

Technical Paper: Liner Shipping in 2025

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