The active container ship fleet has soared to a record 15 million 20-foot equivalent units, driven by deliveries of new vessels and a sharp reduction in the number of laid-up ships, according to Alphaliner.
The growth in the active fleet after eight consecutive months of declining capacity “is likely to lead to renewed price competition as the capacity reduction was one of the key factors behind the carriers’ recent success in raising freight rates,” the container market analyst said.
Sixty-two new container ships with a total capacity of 455,000 TEUs have been delivered since the beginning of the year, 23 of which exceeded 10,000 TEUs each.
The fleet of idled container ships fell from 913,000 TEUs in mid-March to 723,000 TEUs on April 9 and likely will fall further in the coming three months with most of the vessels above 5,000 TEUs expected to be reactivated by the summer.
Increased scrapping — 55 vessels totaling 93,500 TEUs have gone to scrap yards this year — is helping to keep the surge in capacity partially in check.
But although total scrapped capacity this year could reach 200,000 TEUs, it will be a fraction of the 1.4 million TEUs of new capacity expected to come on line.
That additional capacity, coupled with weakening demand, jeopardizes the recent rate increases carriers have made stick, and others they have in the pipeline, Alphaliner said. Growth in demand at main container ports slowed to 5 percent in the first quarter, it noted.
Carriers are expected to report another quarter of weak results, with higher fuel prices likely to offset increasing spot freight rates. Also hurting are the signing of contract rates at much lower levels than spot pricing.
Contact Bruce Barnard at firstname.lastname@example.org.