Analysis paints gloomy picture of container shipping

When the largest vessel ever from a Chinese shipyard docks in Hamburg today, Thursday, it is but the latest example of the troubled times for major container companies, according to Danmarks Skibskredit’s new biannual analysis.

The largest vessel ever delivered from a Chinese shipyard, the container ship Cosco Belgium, will dock in Hamburg today, Thursday, becoming the latest ominous example of what lays ahead for shipping companies, as well as rates. And many like it, such as Maersk Lines new Triple-E, will follow in coming months.

Cosco Belgium is the first in a series of eight 13,380 TEU vessels and it was delivered in February 2013 from the Nacks shipyard in China. The complete series is set to be delivered this year and during 2014 and will be instated on the route from Asia to Europe.

“But it seems inevitable that tonnage providers (i.e. charter rates) will continue to have tough years ahead. Obvious Post-Panamax scrapping candidates are few, as the Post-Panamax fleet is young. And more is yet to come. More than 3 million teu is currently on order, of which more than half is scheduled to be delivered in 2013. Post-Panamax vessels younger than ten years old have to become scrapping candidates if the capacity of the current Post-Panamax orderbook is to be counterbalanced by scrapping,” Danmarks Skibskredit (DSF) writes in its biannual analysis, Shipping Market Review:

“Temporary lay-ups of idling vessels may become an issue again this year or next. A new contracting boom, for whatever reason – ecodesign, marginal cost per teu, or market share – could potentially delay the recovery in the container industry beyond reason,” the analysis states and paints a gloomy picture for shipping prospects in years to come.

“The shipping crisis deepened even further during 2012. Since the heyday of 2008, the fleet has grown by 45%, while seaborne demand volumes are up only 15%. Several, but not all, ship segments are facing lower earnings, and during 2012 the leading earnings index dropped 25%, breaking the previous floor of 2002,” DSF writes and points to high fuel costs and low ship values, as factors worsening the current situation in the shipping industry.

In an analysis Wednesday the maritime association Bimco writes that they expect a new round of general rate increases in coming weeks. Bimco also states that scrapping activity has been through the roof in the first 11 weeks of 2013.

Find the full analysis from DSF here.

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