Tuesday , 17 September 2019
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Orders of new-build vessels of between 8,000 and 10,000 teu capacity are signalling the possibility of overcapacity, unless shipping companies are thinking ‘outside the box’ or have unusual service developments in the pipeline, warns Drewry.

Surplus of 8,000-10,000 teu vessels looming

In a recent release, the shipping consultants said that by the end of this year, 55 vessels averaging 8,600 teu will already have been delivered, a remarkable 18% increase in capacity and well ahead of global cargo growth.  This number will increase further as another 40 vessels are due for delivery during 2014, adding 11.6% to capacity, with a similar year-on-year percentage increase in 2015 when 45 more vessels are due for delivery.

This could be exacerbated if the ‘P3’ Asia – North Europe alliance between Maersk Line, MSC and CMA CGM, due to come into operation in Q2-2014, goes ahead.  This will result in around 20 existing vessels in the 8,000 -10,000 teu range becoming surplus to requirements.  The situation could become even worse next year, as another 44 vessels, averaging 14,638 teu, are due to be delivered, displacing  the same number of smaller vessels.

Looking at demand, Drewry makes the point that the P3 alliance will probably need around 30 larger units for transatlantic services from Q2-2014; however, as yet, none of the players has confirmed their intentions.  Currently, the average ship size on the Northern Europe – North America and Mediterranean – North America routes is 4,000 teu and 4,800 teu respectively.

Unable to compete with the economies of scale offered by bigger transatlantic ships, it is expected that the ‘P3’ competitors will follow suit with larger vessels.  According to Drewry, the G6 alliance (APL, Hapag-Lloyd, MOL, HMM, OOCL, NYK) has so far only clarified that its geographic scope is to be extended to the trade lane, as well as to the Asia – West Coast North America route, with no service rationalisation mentioned.

‘Ignoring this possibility, supply of vessels between 8,000 teu and 10,000 teu looks set to well exceed demand growth’, states the consultants.  This raises the question as to where excess vessels will be deployed, as there is ‘no immediate home for them outside of the east-west trade lanes’, which is where the 21 units ordered by Hamburg Süd, CSAV and CCNI are expected to be deployed.

The opening of the expanded Panama Canal at the end of 2015 will offer new possibilities, with it being highly likely that many Asia – East Coast North America services will be upgraded from the current 5,000 teu restriction in 2016.

(Source – Drewry)