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Friday, April 03, 2009

Container ship lay ups slow down, recovery in sight

Friday, 03 April 2009

The volume of container ships being laid up has started to falter as remote signs of recovery begin to emerge within the container shipping industry, according to shipping analysts. In the past two weeks, the rate of increase for container ship lay ups showed a slight decline, putting an end to five months of sharp increases. Idle container ships are now being re-deployed as the spring cargo season approaches. As of March 30, 485 ships of 1.42 million TEUs (twenty foot equivalent units) capacity were idled, accounting for 11.3 per cent of the global fleet, according to AXS-Alphaliner, a Paris-based consultant.
This compares with 484 vessels of 1.41 million TEUs two weeks ago when the lay-up rate showed the first signs of decelerating after surging from just 70 ships of 150,000 TEUs in late October when Alphaliner began tracking lay-ups. According to the Journal of Commerce, between 25 and 30 idled ships of more than 4,000 TEUs likely will be re-activated in April after several carriers upgrade services in response to increased cargo flows after the post-Lunar new year lull in Asia.
The CKYH alliance and CSAV Norasia are revamping their Asia-Europe services involving the return of several larger ships into the active fleet.
The Grand Alliance-Zim partnership and the CKYH Alliance also are re-introducing two US East Coast services that were suspended towards the end of 2008.
"However, it is still too early to signal a reverse in the trend of increased containership idling as cargo volumes have not returned in any significant numbers," Alphaliner said.
"Some smaller ships that are currently active will also [be] pushed into the unemployed ranks as the larger ships are introduced."
"Cargo volumes need to return strongly in the next three quarters if the current idle fleet is to be absorbed," according to Alphaliner. Major container shipping lines including Maersk Line and APL announced early this year plans to lay up part of their container fleet in a bid to revive freight rates that have collapsed to their lowest levels in 30 years.
Industry observers projected at the beginning of the year that more than 500 container vessels would be temporarily put out of service this year as liners struggled with falling demand and increasing operational costs.
However, the global container industry is showing signs of improving in the second quarter of this year after more than nine months of a sharp downward trend, according to industry players.
"There are growing signs that profitability will return in the coming months. We see optimism returning, however, business is still down at the moment," Ken Bloch Soerensen, President and CEO of United Arab Shipping Company told Emirates Business recently.
Optimism within the industry is largely attributed to the increase in freight rates announced by major container shipping lines in recent days.
However, the World Trade Organisation (WTO) recently painted a gloomy picture for global trade in 2009, projecting an average of nine per cent drop, the sharpest fall since World War II.
"The collapse in global demand brought on by the biggest economic downturn in decades will drive exports down by roughly nine percent in volume terms in 2009, the biggest such contraction since the Second World War," said WTO in its latest forecast.
The container shipping industry is also faced with the challenge of a rapidly increasing container vessel fleet, with shipyards delivering 79 new ships with a total capacity of 297,000 TEUs since January.
While more container ships are being sold for scrap compared with previous years, only 37 vessels of 65,000 TEUs have been broken up in the first three months of 2009. As a result, the capacity of the fleet year-to-date has grown by a net 1.9 per cent, said Alphaliner.
Source: Emirates Business