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Idled containership capacity is expected to reach a record high of 3m teu within weeks, in the “worst capacity crisis the industry has ever seen”, according to new data from Alphaliner.
With over 250 sailings already withdrawn in the second quarter, the consultant forecasts that the lay-ups will push the idle fleet to a level twice that seen during the 2009 global financial crisis.
“No market segment will be spared, with capacity cuts announced across almost all key routes,” warned Alphaliner.
“While larger ships will be cascaded to replace smaller units on the remaining strings, carriers will be forced to idle a large part of their operated tonnage. This will affect all size segments in the coming weeks.”
In addition to the main Asia-Europe and transpacific trades, carriers have also reduced capacity on the transatlantic, Latin America, Middle-East, Indian sub-continent, Africa and Oceania routes, as up to a quarter of the world’s population is in lockdown and non-essential retailers shuttered.
One carrier source told The Loadstar yesterday he expected “many more cancellations” to be announced over the next few weeks.
“We are going to have to anchor a lot of ships, like the airlines have parked their planes,” he said. “Our visibility, for what it is worth, is showing forward bookings from Asia to North Europe down by over 50%, and it could even be worse than that.”
THE Alliance today published details of more blank Asia-North Europe, Asia-Mediterranean and transpacific sailings for May and June, “in response to lower market demand”, including merging loops on the North Europe and Middle East tradelanes and the suspension of a transpacific string.
And the wave after wave of cancelled sailings by the alliances is already starting to impact the containership charter market, as carriers rush to offload as much chartered tonnage as possible.
Alphaliner said: “For the charter market, contracting demand will mean a rising number of unemployed vessels, with carriers seeking to redeliver tonnage whenever they can contractually do so, in order to adjust their capacities to the reduced cargo volumes. As a result, charter rates are expected to take a hit, especially in the larger sizes.”
After a lengthy period of strong demand for charter tonnage, mainly due to the retrofitting of carrier-owned tonnage with scrubber technology, daily hire rates came off their peak last month, with all sectors falling by around 10%.
In particular, ships in the very large sizes of 7,500-11,000 teu proved popular with carriers looking for substitute tonnage, hitting five-year highs and often being flagged as “sold out” by containership brokers.
However, the global coronavirus crisis has brought a sudden end to the good times for owners in the sector.
“Short-term prospects for this segment appear bleak, with more vessels due to join the unemployment queue, while charter rates are expected to nosedive,” said Alphaliner.