Over 200 container ships likely will be laid up in the New Year as charter ship owners and ocean carriers adjust to weakening cargo demand, plunging freight and vessel hire rates.
Over 200 container ships likely will be laid up in the New Year as charter ship owners and ocean carriers adjust to weakening cargo demand, plunging freight and vessel hire rates, and an influx of new ships onto key liner trade routes. Some 165 container vessels totalling 430,000 TEUs capacity were idle just before Dec. 25, up from 300,000 TEUs two weeks earlier, according to the latest estimates from AXS Alphaliner, the Paris-based consultant.
This represents 3.5 percent of the world fleet in TEUs, equivalent in relative terms, to the laid-up figure during the lowest point of the 2002 slump, AXS says. The list of unemployed tonnage includes six ships of between 7,500 and 10,000 TEUs, and 19 between 5,000 and 7,500 TEUs.
The pace of the market"s retreat has taken the industry by surprise -- in November AXS was predicting the idle fleet would reach 400,000 TEUs by the end of January. It now expects several more ships, especially in the bigger sizes, to be idled by year"s end as vessels end their rotations on suspended Asia-Europe services.
The record idle tonnage coincided with the world container fleet breaking through 13 million TEUs, to 6,078 ships, in mid-December, after growing by 1 million TEUs since March, according to AXS Alphaliner.
The consultant predicted the world fleet will reach 14 million TEUs in August.
Charter ship owners have taken the biggest hit from the market slump accounting for 105 of the 165 idled vessels, a figure that"s set to rise sharply in the coming weeks as scores of vessels are due to come off hire with little prospect of re-employment.
If it can find work, a 2,750-TEU sub-Panamax ship will earn around $10,500 a day compared with $19,500 in September and around $30,000 at the beginning of 2008.
In response, German owners, who account for the bulk of the world charter fleet, have decided to reactivate a mutual support scheme on Jan. 1 to provide temporary and partial financial compensation for jobless ships.
The system was established during the 2002 as owners faced mass lay-ups but was never activated as the market suddenly embarked on a boom driven by China"s emergence as a global trading power.
Owners don"t expect a similar revival in 2009 as export shipments from China and other Asian nations are slowing, cutting carriers" demand for chartered tonnage and sending rates plummeting.