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International Cooperation Department
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Logistics |
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| Spectre of boxship lay-ups return |
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Date:2022-11-15 Readers:
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AS multiple capacity levels deemed insufficient to halt the decline in container freight rates, the spectre of ship lay-ups has been raised, reports Singapore's Splash 247.
Rates remain elevated, but the plunges recorded over the past few months have scared the industry, with many smaller operators deciding to exit the main east-west trades.
Global contracted rates fell 0.6 per cent in October, following September's 1.1 per cent decline.
"What we may well see is shippers looking to transfer volumes to the spot market, spooking carriers desperate to tie-in business. As a result carriers could be forced to lower those coveted contracted rates," said Xeneta CEO Patrik Berglund.
Spot rates on the transpacific to the US west coast are up 54 per cent compared to the same period in pre-Covid crisis 2019.
Meanwhile, prices from Asia to North Europe are up 146 per cent.
Nevertheless, Sea Intelligence is forecasting a hard landing for container shipping, with rates continuing to slide in the coming weeks.
"If the market continues to deteriorate rapidly in the coming week - and especially if this is driven by a sharp global recession - then the raft of blank sailings we should expect in the coming weeks and months could in 2023-Q1 turn into carriers not only idling vessels but temporarily placing them in lay-up, as we also saw in 2009," said Sea-Intelligence.
Other analysts have highlighted how blanked sailings and service suspensions have not been enough to halt freight rate declines.
Furthermore, they pointed out how scrapping may not help out as much as some liner executives are hoping.
Said Linerlytica researchers: "The blanked sailings have been ineffective in preventing freight rates from sliding on all main trades, with the Middle East the only notable exception,"
Alphaliner declared there is 655,149 TEU of the scrappable tonnage of 25 years of age and older, but 2.5 million TEU of potential recycling candidates totals 1,102 vessels which are 20 years of age and older.
"Although the removal of 2.5 million TEU of capacity aged 20 years and over would be instrumental in helping mitigate the impact of the 5.1 million TEU newbuild capacity to be delivered within the next two years, this is just not going to happen overnight," said Alphaliner.
https://www.shippingazette.com/menu.asp?encode=eng |
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