By Mike Wackett
The number of containerships in hot or cold lay-up is still surprisingly low, given the weak demand on many of the world’s trade lanes. According to the latest survey from Alphaliner, there were 181 ships of above 500 TEUs laid-up as of October 7, representing 443,000 TEUs of slots – still some way short of the 300-boxship level recorded as inactive at the same period in the past two years.
There is no doubt that the number of idle containerships will increase in the coming weeks as the winter season approaches, but the numbers will be mainly swelled by redundant Panamax ships with no employment, thanks to the cascading impact of the delivery of 70 ultra-large containerships over the past 20 months. Indeed, in difference to the 600 containerships that were idled in the depths of the financial crisis at the end of 2009 – only to be reactivated six months later when repressed demand kicked back in – the ships consigned to a lengthy period of lay-up are, in today’s market, effectively waiting to be scrapped. They are idling until recycling prices edge up before making their final voyage to a beach in India, Bangladesh or China.
In the past weeks, freight rates on the troubled Asia-Europe trade lane have once again plummeted to near the $500 per TEU danger level, from a mid-year high of $1,500. This dramatic decline into a sea of red ink has forced the carriers to once again push the panic button – a sledgehammer double-whammy of a $900 per TEU average general rate increase combined with the blanking of sailings.
Blanking, voiding, skipping or, more correctly, cancelling voyages to arrest the decline in freight rates, is the preferred new tool in the carriers’ box that can turn the tap off and back on again as required when demand has tipped the balance over supply and freight rates have reacted accordingly. According to the latest information from the carriers, November will see no less than 11 voyages pulled from Asia to north Europe, as well as six sailings to the Mediterranean, coinciding with the carriers’ $900-1,000 per TEU GRI in November. Shippers complaining at Intermodal Hamburg last week of the one-size-fits-all mandatory superslow-steaming 40-day transit time on Asia-Europe may find the latest carrier upgrade even more difficult to digest – some new service speeds are at full-stop.
Reprinted courtesy of The Loadstar (www.theloadstar.co.uk).