Rigid Mega Boxships Causing Trickle-Down Effect

first_imgzoom As the “arms race” for Ultra Large Container Vessels (ULCVs) of 18,000 TEUs and above heats up, carriers must not overlook the value of having a smaller, but more flexible fleet in slowing market, according to the U.K.-based shipping consultant Drewry. There is no going back from this point Drewry says, as the industry has made it abundantly clear that they see these ULCVs as the future. But recent developments have exposed their inflexibility somewhat.The alarming drop in Asia to Europe traffic and a parallel crash in rates caused big carriers groups to take the unprecedented decision to suspend services in the supposed peak season, with some alliances also tinkering with missed sailings in order to try and support higher rate requests.The inflexibility of the ULCVs that can’t operate in any other trade besides the Asia-Europe lane makes it very hard for carriers to react to fluctuating demand and juggle ships accordingly, Drewry says.All of the 10,000 TEU+ newbuildings delivered this year to the end of August have been deployed in Asia-Europe, but it’s where carriers are putting the ships of between 8,000-10,000 TEU  that reveals how they are trying to spread the burden of the new capacity as thinly as possible to avoid contaminating too many other trades.The effect of this is that many of these trades are seeing significant upsizing of the largest vessels used. This is particularly evident in Asia to East Coast South America, which goes some way to explaining the rapid fall-off in spot rates in that corridor, according to Drewry.It is a delicate balancing act, and one that carriers cannot win all of the time, but by distributing the new ships widely they do at least give themselves the chance of maintaining some level of balance. Ultimately though, the equation is unsolvable as there is simply not enough cargo to fill all of the ships, Drewry says.last_img read more