12 Percent of containership fleet is idle

American Shipper quotes Alphaliner on the delays in orders for new containerships

More than 300 ordered containerships, accounting for 2.4 million TEUs worth of capacity, have seen their delivery dates deferred or delayed since October 2008, according to the maritime news service Alphaliner.

But what I thought was most interesting, was the comment on current idle capacity

...the idle container fleet has hit 1.5 million TEUs, Alphaliner reported. That’s approaching 12 percent of the global fleet, a record high. That the idled fleet is rising during December is unsurprising, given that carriers are rationalizing services during the traditionally weak winter months. Alphaliner projects the idle fleet will keep rising until March.

Until the idle capacity goes away, one would think the newbuildings will just keep getting pushed back.

Of course, there are two ways idle capacity can be decreased. Ships can be chartered or, they can be scrapped.

click here for link to article

KG funds have idle tonnage

Lloyd's List reports

- Monday 7 September 2009

AROUND one in every six of the 614 boxships idled or in lay-up is operated by a German KG fund, writes Michelle Wiese Bockmann.
The German-financed vessels comprise 132 of the world’s inactive boxships according to Lloyd’s Marine Intelligence Unit data.

Considering the so called "peak season" is not yet over, this is particularly worrisome.

Container carriers will get rid of their charter tonnage before they lay-up their owned ships. The percentage of owned to chartered tonnage varies from carrier to carrier, but it wouldn't surprise me if the KG funds don't end up with 50% of their tonnage idled.

That's my guess.

We will have to see what the reports say in January.

This does not bode well for the international shipping business.

Four More Years

That's probably how long before we see a recovery in the containership market, according to Offen, one of the major shipowners in Germany.

CLAUS-Peter Offen, one of Germany’s largest shipowners, expects massive lay-ups of containerships in the next three years.

“About 1m teu is already idle. This number will double in 2009 and triple in 2010,” he said during the 8th annual German ship finance forum in Hamburg.

He estimated that 25% of the worldwide container fleet would be put out of work by the end of 2011.

He expects the overcapacity in container shipping to peak around 2011 as there are a lot of newbuildings due for delivery in the next three years.

From 2012 the market for newbuildings will be completely dried up and overcapacity will decrease.

“Four years from now the charter rates may rise again and another two years later supply and demand may be in balance again,” he said. “In 2014 we could be back in good markets.”

When will container shipping rebound?

Not until 2011 or later.

Currently 8.8% of the worldwide container fleet is laid up.

It will most certainly get worse before it gets better. If we are lucky, maybe by 2012 - that's 3 years, but the cycle for shipping is normally around 7-10 years, so my guess is not really until 2016 plus.

More ships likely will be laid up as the rebound in Chinese exports failed to materialize after the Lunar New Year. As a result, shipments likely will fall by 15 to 20 percent in the first quarter compared with a year earlier. “Large ships continue to gather up in Asian roads as they end their rotations on the closed services on which they were employed,” AXS-Alphaliner said.

It said container traffic must grow at annual rate of 15 percent for three years to bring the supply-demand balance into equilibrium by January 2013.

A less optimistic but more reasonable average 10 percent annual growth would delay a return to equilibrium before 2014.

click here for complete article from Journal of Commerce.

More Containerships Sitting Idle

There are a lot of container ships sitting idle. As of Dec. 29, 2008;

AXS-Alphaliner calculates the amount of idle tonnage at equivalent to 3.5% of the total cellular fleet, the same in percentage terms as that reached during the last downturn of 2002, when the fleet was much smaller.

So in percentage terms, this really isn't so bad. The fleet has grown at an astounding rate.

The downturn comes at a time when the fleet is growing at record speed, with total capacity passing the 13m teu level just before Christmas.

That represents growth of more than 100% since mid-2001 when the fleet stood at 6m teu.

It then took 21 months to climb by another 1m teu, whereas this year, the fleet gained 1m teu in the space of just nine months, and is on course to grow to 14m teu by August 2009.

This is just part of the cyclical business of international shipping. Overbuild, lay-up. The German shipowners are old hands at this problem. During the last downturn they formed the Containership Association.

German owners of container vessels has started a mutual fund for economic compensation to vessels laid-up. Initially the fund has gathered one-vessel owners with a total of 140 ships, writes Lloyd’s List. According to the latest estimates, there are around 150 container vessels laid up around the world, a more is to come. Members can expect a cover of about 70 per cent of the going charter rate.
German Containership Association was established in 2002, but was not activated until now. One reason was uncertainty whether the scheme was in breach of EU regulations. The association now claims that this is not the case as support will only be given for two-three months, and the vessels must be ready to resume service.