Want an overview of how the international shipping industry is looking? Specifically looking at ocean freight? You’re in the right place. It’s time for a good old fashioned nerdy blog covering what’s happening with the ocean carriers and container shipping in the ever volatile world of exporting and importing goods.
Increasing Container Ship Dimensions
Megaships, megaships, megaships. We’ve heard no end to talk about bigger and bigger container ships over the last few years.
It has been something of a race between carriers to deploy bigger and bigger ships. All about gains in economic efficiency, shipbuilding trends have been to create Ultra-Large Container Ships (ULCS)–Ah, what’s a nerdy blog without a good acronym or two.
The expectation is that ULCS will rise from currently being 6% of the total operated fleet of the top 20 carriers to over 10% by 2016.
With the market being so volatile (that’s a theme you should know well if you’ve followed the international shipping market over a period of time), carriers have to upgrade their fleets in order to reduce unit operating costs. Now single ships carry much larger TEU capacities.
Note: (For those of you a little newer to international shipping, TEU = twenty-foot equivalent unit, measuring how much a vessel can carry in 20′ containers. Just one of the many nerdy acronyms of international shiping, but also one of the most common ones you’ll see. It’s not uncommon to see this acronym all in lower case letters.)
In European trade, ships with capacity of over 13,000 TEU are set to serve. Trans-Pacific trade, while starting to see megaships or ULCS on the water isn’t quite accommodating as large of ships as European trade. Trans-Pacific West Coast can accommodate ships with 10,000 to 12,000 TEU while the Trans-Pacific East Coast is can handle 8,000 TEU sized ships via the Suez Canal.
Note: (The Panama Canal should be able to handle ships of this size as soon as it completes expansion in 2014 or 2015 and is expected by many to largely increase the number of ULCS reaching the U.S. East Coast.)
Idle Ships Down & Fleet Scrapping Up
Controlling capacity is huge for carriers trying to keep freight rates profitable. Two of the ways they manage capacity is by parking active ships on a coast somewhere, making them idle, or scrapping ships altogether. Scrapping ships is, of course, also part of updating and upgrading fleets.
Idle containerships is actually down at the moment. Idle ships larger than 500 TEU is at the lowest levels seen since October of 2011. Alphaliner figures show 182 units for 387,000 TEU are currently idle. That’s 2.3% of the total fleet.
Small vessels that are under 500 TEU are the most impacted right now by carriers making ships idle. When it comes to the number of ships idle that are over-panamax, that number has shrunk to 4 units, including 2 MOL ships about to rejoin the ships in operation in the next few weeks.
Note: (Panamax is the term for the largest size ship that can travel through the Panama canal.)
When it comes to fleet scrapping, those numbers are way up. With all the large ULCS vessels hitting the water spoken about in the last section, you would expect capacity to be growing at an alarming rate. The growth rate of the fleet has not reflected the huge influx of megaships or ULCS because of what a high speed ship scrapping is happening at.
2009 set the record for scrapping at 379,000 TEUs being eliminated from the world fleet. The total scrapping in 2013 is expected to exceed that and set a new record.
International Shipping Overview Continues
Part 2 of this blog gives an overview of the international shipping industry looking at the topics of TP Trade, GRI and PSS Development, and Market Rates. That’s right, plenty more nerdy acronyms to cover.
Of course, if you need specific freight rates right now, Universal Cargo Management is always ready to give you free freight rate pricing on your imports and exports.
Click Here for Free Freight Rate Pricing
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Source:
Jerry Huang, Director of Ocean Freight Procurement Asia Toll Global Forwarding/Seamaster Global Forwarding — 9-2-2013
