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Nov 8, 2016 Blog

Another Challenging Year Ahead for Container Shipping

According to Drewry, 2020 will prove another challenging year for container shipping in terms of capacity management. However, the consultant claimed the industry would be able to cope.

Drewry calculates that 1.2 million teu of capacity will be added to the fleet this year, of which almost half comprises twenty-three 20,000-plus teu ULCVs for HMM, CMA CGM and MSC.

According to Alphaliner data, the container ship fleet grew by 4% in 2019, to 23.2 million teu of capacity (5,337 ships), resulting from 1.06 million teu of newbuild deliveries against 207,000 teu of ships sold for scrap.

With demand growth predicted to remain weak, the ‘challenge’ from the orderbook is ever present. As they did in the past, carriers may be able to roll over delivery dates for some vessels into 2021, when currently only two ULCVs are stemmed. The main tool in their box may continue to be blank sailings.

Drewry’s data reveals that there were 253 voided east-west sailings by the three alliances last year. This number was significantly up on the 145 cancelled sailings in 2018.

The consultant also said container lines had become “very adept at switching capacity around and hiding it when necessary.”

“We cannot afford to let it (supply) get out of control again this year, and we must not be fooled again by over optimistic assessments for the peak season,” one carrier said. They plan to be more aggressive in its blanking program this year.

Moreover, with some 250 vessels. for more than 2 million teu of capacity, either being retrofitted with scrubbers or awaiting their turn to enter dry docks, supply will continue to be skewed in the first half of the year. This will enable carriers to painlessly phase-in newbuilds while existing vessels are out of service.

As for the long-term, Drewry, suggests carriers will need to be “more ruthless on demolitions and remain restrained when it comes to ordering new tonnage.” Another factor that could put a brake on the orderbook is the uncertainty across the industry over the strategy required to reach carbon-neutral targets.

“Deciding on the most suitable ship propulsion alternative will, understandably, take time, and the longer carrier executives take to consider and delay investment in new ships, the more time the industry will have to reduce its capacity surplus,” said Drewry.

It added a caveat that, to achieve profitability, the lines must continue to keep their operating costs in check.

WP_Post Object ( [ID] => 221771 [post_author] => 1 [post_date] => 2020-01-23 19:05:14 [post_date_gmt] => 2020-01-23 19:05:14 [post_content] => According to Drewry, 2020 will prove another challenging year for container shipping in terms of capacity management. However, the consultant claimed the industry would be able to cope.

Drewry calculates that 1.2 million teu of capacity will be added to the fleet this year, of which almost half comprises twenty-three 20,000-plus teu ULCVs for HMM, CMA CGM and MSC.

According to Alphaliner data, the container ship fleet grew by 4% in 2019, to 23.2 million teu of capacity (5,337 ships), resulting from 1.06 million teu of newbuild deliveries against 207,000 teu of ships sold for scrap.

With demand growth predicted to remain weak, the ‘challenge’ from the orderbook is ever present. As they did in the past, carriers may be able to roll over delivery dates for some vessels into 2021, when currently only two ULCVs are stemmed. The main tool in their box may continue to be blank sailings.

Drewry’s data reveals that there were 253 voided east-west sailings by the three alliances last year. This number was significantly up on the 145 cancelled sailings in 2018.

The consultant also said container lines had become “very adept at switching capacity around and hiding it when necessary.”

“We cannot afford to let it (supply) get out of control again this year, and we must not be fooled again by over optimistic assessments for the peak season,” one carrier said. They plan to be more aggressive in its blanking program this year.

Moreover, with some 250 vessels. for more than 2 million teu of capacity, either being retrofitted with scrubbers or awaiting their turn to enter dry docks, supply will continue to be skewed in the first half of the year. This will enable carriers to painlessly phase-in newbuilds while existing vessels are out of service.

As for the long-term, Drewry, suggests carriers will need to be “more ruthless on demolitions and remain restrained when it comes to ordering new tonnage.” Another factor that could put a brake on the orderbook is the uncertainty across the industry over the strategy required to reach carbon-neutral targets.

“Deciding on the most suitable ship propulsion alternative will, understandably, take time, and the longer carrier executives take to consider and delay investment in new ships, the more time the industry will have to reduce its capacity surplus,” said Drewry.

It added a caveat that, to achieve profitability, the lines must continue to keep their operating costs in check.

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