News / Smaller tradelanes could be swamped by arrival of bigger containerships next year

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An armada of some 54 containerships of 10,000teu and more is due to be received by carriers by the end of next year, likely to be deployed on the Asia-Europe tradelane – a scenario transport consultant Drewry believes will have a “huge effect” on the supply-demand dynamics of the liner industry.

In its latest Container Insight Weekly, Drewry estimates that weekly nominal Asia-Europe headhaul capacity could increase by a massive 12.8% – a figure several times higher than even the most optimistic of cargo growth forecasts.

If deliveries are not postponed and these calculations prove correct, the current struggle to arrest declining freight rates will seem relatively easy by comparison.

On Friday, spot rates on Asia-North Europe, recorded by the Shanghai Containerized Freight Index, dipped 21%, week-on-week, to again fall below the $1,000 per teu level regarded as break-even for carriers. And there are predictions of worse to come as the slack season takes its grip.

Carriers have struggled this year to hold Asia-Europe general rate increases for more than a few weeks at a time, even during the peak season when ship utilisation levels were above 90%. A year on and with the imbalance significantly worse, the prospects of getting GRIs to stick will be nigh impossible.

“The major carriers are running a fine line at the moment between deploying their largest assets to cut costs and ruining the dynamics of their most important trade lane,” said Drewry.

At the same time, the potential cascading of current Asia-Europe vessels onto other routes represents a serious threat to supply-demand on those trades.

Drewry said north-south trades had been negatively affected for some time in this way. There are now nearly 40 vessels of at least 10,000teu operating on the transpacific route – a key factor in the chronic congestion blighting US west coast ports, which are fast losing the battle to cope with the larger exchanges of containers from each ship call.

Altogether, Drewry warned, 61 vessels of between 8,000-11,000teu could be cascaded from Asia-Europe in the next 15 months, having a ruinous impact on routes such as Latin America.

Drewry said the Ocean Three alliance of CMA CGM, China Shipping Container Lines and UASC was responsible for the largest planned injection of ultra-large containerships within the next 15 months, with 21 stemmed for delivery.

On current planning, by the end of 2015 Ocean Three will operate the largest ships between Asia and North Europe, averaging nearly 16,000teu, compared with the 2M’s average of just over 14,000teu and the G6 and CKYHE groupings’ approximate 12,200teu.