Trouble ahead for 8,000-10,000 TEU vessels, warns Drewry

  • Ocean carriers face pool of surplus ships unless action is taken

London-based shipping consultants Drewry has issued a stark warning to ocean carriers that they will be faced with a pool of surplus 8,000-10,000 TEU vessels unless some thinking ‘outside of the box’ is behind recent newbuild orders.

Ocean carriers have returned to ordering vessels between 8,000-10,000 TEU in large numbers, note Drewry, which suggests that either overcapacity is on the horizon, or unusual service developments are in the pipeline.

By the end of this year, 55 vessels averaging 8,600 TEU will already have been delivered, increasing the sector’s capacity by a remarkable 18 percent, well ahead of global cargo growth. A further 40 are due for delivery next year, increasing it by another 11.6 percent. Moreover, 45 more are due for delivery in 2015, adding yet another 11.6 percent to year-on-year growth, according to Drewry.

On top of this, around 20 existing vessels in the size range are due to become surplus to requirements once Maersk Line’s, MSC’s and CMA CGM’s Asia/North Europe services are merged in the second quarter of this year. To make matters worse, another 44 vessels averaging 14,638 TEU are due for delivery next year (further postponements excluding), which will most probably lead to the same number of vessels between 8,000 TEU and 10,000 TEU being displaced.

On the demand side of the equation, the P3 alliance will probably need at least 30 of the units for its five transatlantic services. Because its competitors will be unable to compete with the economies of scale offered by these bigger transatlantic ships they will presumably have to follow suit, although it remains unclear as to how this will be achieved.

The G6 vessel sharing alliance (APL, Hapag-Lloyd, MOL, HMM, OOCL, NYK) has so far only clarified that its geographic scope is to be extended to the tradelane, as well as to the route between Asia and WCNA. No service rationalisation has been mentioned.

Ignoring this possibility, supply of vessels between 8,000 TEU and 10,000 TEU looks set to well exceed demand growth, so where the excess will be deployed is intriguing state the London-based firm.

The opening of the Panama Canal’s expanded locks at the end of 2015 will open up many new possibilities, although, here again, nothing has yet been confirmed, so envisaging anything would just be conjecture. However, it is highly likely that many Asia/ECNA services will be upgraded from the current 5,000 TEU restriction in 2016.

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