Although the number of vessels being scrapped this year has increased
dramatically, and looks set to continue rising, it is having little impact on
the current excess of supply over demand where it matters most – in the
East-West trades, according to the latest edition of Drewry's 'Container
Insight Weekly'.
All of the vessels scrapped so far remain below 6,000 teu, whereas the
worst excess is in the sector over 10,000 teu, where most vessels are deployed
between Asia and Europe. This means that unwanted ULCVs will continue to be
cascaded into other routes, thereby maintaining pressure on freight rates.
Out of the 73 vessels scrapped up to the end of April, only seven were
post-Panamax ships between 5,000-5,999 teu, with the rest being below 4,999
teu, which position has changed little since
The average size of vessel demolished over the four month period only
reached 2,855 teu, compared to 2,288 teu over the whole of 2013, 1,868 teu in
2012 and 1,293 teu in 2011. In other words, only vessels deployed in fast
growing North-South and intra-regional trades are being scrapped, which is not
immediately relevant to East-West services.
Moreover, the amount of vessel capacity being scrapped still remains
small compared to the total fleet capacity in service. Even if the current rate
of scrapping were to be continued over the rest of the year, less than 4% of
the world cellular fleet would be scrapped in 2014.
When analysing the subject, the temptation is to simply compare global
cargo growth, which is not expected to exceed 5% this year, with global fleet
growth, which will probably be somewhere between 5-6%, making this demolition
rate look meaningful. For example, a hefty 40% of vessel capacity growth so far
this year has been offset by demolitions.
But the comparison overlooks the uneven way that excess vessel capacity
is being delivered. just over 50% of all newbuild capacity brought into service
since the beginning of 2011 has been provided by vessels over 10,000 teu
deployed on East-West routes. The
average provided by vessels below 5,000 teu, where most scrapping has been
taking place, is just 17%. Moreover, the capacity of all vessels scrapped last
year (i.e. less than 6,000 teu) only more-or-less equated to the newbuild
capacity injected by vessels less than 6,000 teu.
The position is not expected to get any better soon, as 55% of all
newbuild capacity on order up to the end of 2016 consists of vessels over
10,000 teu, and the world cellular fleet is expected to grow by 20% during the
period, ignoring further demolitions and delivery postponements. Although some
of the vessels between 6,000 -9,000 teu that they will displace will quickly
fit into North-South routes, the majority won’t due to draught restrictions in
such places as Africa, India, and South America. Dredging takes time due to
environmental considerations alone.
Drewry's View
Current scrapping alone will not be enough to meaningfully address the
current imbalance between supply and demand in East-West trades. As long as
only ships below 6,000 teu continue to be demolished, North-South trades will
be the sole beneficiaries.
Source: marine link. 19 May 2014
No comments:
Post a Comment