This year’s capacity growth will be the lowest ever recorded for the global container shipping fleet, according to Alphaliner, welcome news for an industry already buried under a deluge of excess vessels that cannot be filled.
The analyst expects the fleet capacity to grow by 4.6 percent in 2016, with fewer new buildings and a rising level of scrapping. This combination of fewer deliveries and greater numbers of ships being demolished will add less than 1 million 20-foot-equivalent units to the global fleet.
In percentage terms, fleet growth is lower than the previously smallest year-over-year rate of 5.5 percent recorded in 2009 and well below the 10.3 percent average annual growth rate recorded since 1990.
The record low fleet growth follows last year’s record high when 1.72 million TEUs of capacity were delivered. Deliveries this year are expected to reach 1.25 million TEUs, but Alphaliner noted that continued slow demand could see owners delaying some deliveries or even cancelling some orders altogether, particularly at financially troubled yards. Scrapping and other deletions is expected to account for about 350,000 TEUs.
Yet even with the moderating capacity growth, Alphaliner said the supply-demand equation remained heavily imbalanced because of the surplus ships carried over from 2015 and weak cargo demand growth.
“Any positive impact of the lower fleet growth, as far as a market equilibrium is concerned, would only become apparent if the capacity overhang were cleared,” the analyst wrote in its weekly newsletter.
“With the current idle container ship fleet running at 1.35 million TEUs, or 6.8 percent of the total fleet, it would require a few more years of low fleet growth before the supply-demand imbalance recedes.”
There is little sign of action on the demand side. The traditional surge in volumes in the few weeks before Chinese New Year has yet to happen with just two weeks until the long holidays begin. A planned Jan. 15 general rate increase looks like it was scrapped by the carriers and spot rates on Asia-Europe were down 21 percent last week.
Compared to last year, Asia-U.S. West Coast spot prices last week were down more than 30 percent and rates to the East Coast were 44 percent below the same week last year.
“There are no signs of any strong market demand during the pre-holiday period, with carriers starting to cut spot freight rates from China again, giving up part of the gains achieved from the Jan. 1 general rate increases,” Alphaliner said.
Source: joc.com. 22 January 2016