Idle Container Fleet Set to Soar in Fourth Quarter

The number of idled container ships, which has shrunk rapidly over the past year, is set to increase sharply through the fourth quarter as ocean carriers cull capacity on key routes, a leading industry analyst said.

The jobless fleet, which currently stands at 225,000 20-foot equivalent units, could rise to between 600,000 TEUs and 1 million TEUs by the end of the year, according to Paris-based Alphaliner.

No carrier has yet confirmed its new winter schedules but capacity cuts are planned as lines move to bring supply and demand into balance as cargo volumes show signs of weakening after surging over the past nine months.

By The Numbers: Asia-Europe Westbound Container Traffic.

The majority of the ships facing lay up are likely to be above 3,000 TEUs capacity due to the seasonal adjustments on the line haul Far East-Europe and Far East-North America services.

These ships have limited alternative deployment options and will most likely be placed in short term lay up, according to Alphaliner.

The reduction in the idled fleet to 225,000 TEUs from 1.5 million TEUs in January has been driven by the rapid redeployment of laid up ships for new services.

The spread of extra slow steaming across the industry also has absorbed around 320,000 TEUs of capacity since the beginning of the year.

The bulk of the laid-up fleet was re-activated despite the delivery of 1.21 million TEUs of new vessels so far this year.

“However, the decline of the containership fleet looks certain to be reversed in the next few weeks as seasonal volume reductions are due, especially on the Asia-Europe trade where some 10 percent of the ships currently deployed could be removed," Alphaliner said.

At least three services are expected to be removed from the Far East-Europe route, as well as a further two on the Far East-Mediterranean trades.

This would swell the unemployed fleet to about 300,000 TEUs with some fifty vessels of 3,000 TEUs to 8,000 TEUs freed up.

Eivind Kolding, chief executive of Maersk Line, the market leader on the Asia-Europe route, has said the carrier expects to lay up tonnage at the beginning of the fourth quarter as cargo demand slows.

"There will be simply too much capacity in the market, so our response will be to take out some capacity from the start of October," he said.

-- Contact Bruce Barnard at brucebarnard47@hotmail.com.