News / Red Sea crisis proving 'a boom period' for feeder operators

Photo: X-Press Feeders

The ‘new normal’ of ocean shipping disruption is good news for feeder operators, which have been growing their fleets rapidly over the past year.

This week Alphaliner reported that Singapore-headquartered X-Press Feeders had expanded its fleet by an “impressive” 21.8% since last October, adding 35,000 teu. And DP World-owned Unifeeder has boosted its fleet capacity by 23,000 teu, growth of 17.9%.

By comparison, the global liner fleet grew 10.9% in the same period.

“Both carriers are benefiting from the Red Sea crisis which has forced most mainline operators to avoid the Suez Canal and, instead, call on third-party feeder operators,” says the shipping consultant’s weekly report.

Indeed, one former feeder service operator told The Loadstar: “Any form of disruption to liner schedules is good news for feeder operators… The best days for me as a feeder operator were when there were strikes at ports.

“The feeder companies and containership owners are really enjoying a boom period thanks to the Houthis.”

Alphaliner noted that the crisis had resulted an increase of traffic on trades such as Middle East/Indian Subcontinent for X-Press and Intra-Med traffic for Unifeeder subsidiary Unimed Feeder Services.

However, time-charter rates for feeder vessels of 1,700 teu to 2,700 teu have begun to decline, according to the latest data from liner maritime consultancy MSI, which also predicts further falls this year.

“We believe feeder charter rates will decline the most among the charter market in Q4 24, due to the higher availability of vessels compared to the large sizes.

“Moreover, the intra-Asia trade is expected to grow at a slower pace compared with the especially robust first half of 20224.

“However, there are upside risks that will most likely limit the magnitude of the declines. First, liner demand for feeders remains strong. Second, net fleet growth is expected to turn negative in Q1 25 due to very low levels of new deliveries. Third, the intra-Europe and intra-Latin America trades have proven more robust than we expected, adding to demand for feeder units.

“Liners may also be moving to secure vessels ahead of the alliance and network structure shake-ups expected in Q1 25,” it said.

Last week, Hans-Henrik Nielsen, director of NVOCC CargoGulf, told The Loadstar Podcast: “You don’t have the very large container vessels doing port calls at Jeddah, en route to Europe and back. Instead, it is now smaller, dedicated tonnage that goes in and out of the Red Sea.

“That has certainly created opportunities for companies like us. It’s more niche”, he added, explaining that main line operators were “not as flexible”.

“You need to be able to finesse the business more… We have seen a lot of operators change their service profile to a hub and spoke service,” said Mr Nielsen.

The limited market capacity, due to extra tonnage needed for transits via the Cape, has also exacerbated the demand for feeder services. With mainline carriers scrambling for scarce tonnage, they are “therefore forced to use a third-party feeder company”, said the former feeder operator.

“Feeder companies and NVOOs that I have spoken to are very happy about [the forthcoming] Gemini [alliance] as they are convinced that Maersk & Hapag will need some help with their shuttle concept,” the source said, and explained that while the liners would control most of the hubs, “the spoke ports are another issue. From time to time, they will need help from a feeder or need to charter at the last minute.”

X-Press Feeders’ impressive growth this year, placing an order for six new 11,000 teu container vessels to enter service in 2027 and 2028, has afforded the operator the ability to broaden the scope of its offerings.

The newbuilds – its biggest vessels by far – mark X-Press Feeders’ entry into the larger ship segment, although it is not known on which routes the vessels will be deployed.