News / Smaller vessels bound for the scrapheap as capacity mismatch widens

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The box shipping fleet has reached its highest average age since records began, according to research by Bimco, with a great number – overwhelmingly in the smaller size range – set for demolition.

The Loadstar has long reported on the disparity between demand for smaller vessels on feeder and shortsea routes and major carrier disinterest in ordering new ones.

And this shows no sign of abating, according to the latest research, which finds that vessels under 8,000 teu are much more likely to be older than 20 years than those in the higher size ranges, making them prime candidates for scrapping.

Rather than replenishing fleets with smaller vessels, however, carriers have preferred to order larger ships and cascade them onto smaller trades.

“Since the average size of ships is getting bigger, a 10% increase in volume is not going to increase the amount of services and routes by 10%, because smaller ships are being replaced with larger ones,” suggests the research.

Bimco chief analyst Neils Rasmussen told The Loadstar he did not regard the tendency of increasing average ship sizes as “necessarily a bad thing”, but he added: “I think some shippers may want more choices. The flip side of that is that if line operators wanted to offer this, they would have to send smaller ships with higher costs, resulting in higher freight rates.”

From an environmental standpoint, older smaller vessels are less likely to meet incoming IMO and EU emissions regulations; Maersk Broker described today’s older feeders as “no longer economic” and “will have difficulty getting a workable CII rating”.

Xeneta, in its carbon emission carrier rankings, routinely finds the deployment of newer, larger and slower vessels on smaller trades is good news, from an emissions standpoint.

However, questions remain over the knock-on effects. Over time, fleet size increases are likely to yield a further shift toward a “hub-and-spoke” model – but without new more-efficient feeder vessels to serve as the spokes and call at shallower ports, closer to the eventual destination of their cargo.

Xeneta chief analyst Peter Sand has told The Loadstar how this could effectively trigger a modal shift, away from shipping onto more-polluting trucks. Some ports would become “less-connected”, causing shippers to use “inland transport from hubs rather than feeders… much less efficient than container shipping”, he said.

Criticising the IMO CII, which he claims will punish many smaller feeder vessels, Mr Sand pointed out: “Using feeder ships on the intra-regional trades is more efficient than the largest ships calling a range of different ports and sailing with less and less cargo as it makes its way through a region.”

The Loadstar’s Mike Wackett said that, both from an environmental and value-for-shippers point of view, a “new and vibrant” feeder fleet would be necessary.

“As more ultra-large vessels replace mid-sized ships, hub and spoke operations will increasingly come into play, requiring an efficient eco-friendly feeder fleet to relay boxes,” he said. “In my view, the current orderbook is totally out of kilter and will not meet the needs of the liner industry, going forward.”

 However, Bimco’s Mr Rasmussen said he did not expect this to be a major issue, explaining: “There may of course be some ports… where the physical restrictions are such that you can’t sail larger ships in. But I think the cascading process will be very gradual, allowing smaller ports to follow along.”