The active container ship fleet has climbed to a record 15 million 20-foot equivalent units, powered by deliveries of new vessels and a severe reduction in the number of laid-up ships, reports The Journal of Commerce.
This active fleet growth is predicted to renew price competition, especially after eight months of decreasing capacity. The capacity reduction was a main contributor to carriers’ being able to successfully raise freight rates.
62 new container ships with a total capacity of 455,000 TEUs have been delivered since the beginning of 2012; 23 of these vessels exceed 10,000 TEUs each. The fleet of inactive container ships fell from 913,000 TEUs to 723,000 TEUs from March to April of this year. Market analysts predict these numbers to continue to fall in the next three months with most of the vessels above 5,000 TEUs expected to be revived by the summer.
As scrapping also increases, with 55 vessels totaling 93,500 TEUs going to scrap yards already this year, it is helping to keep the flow in capacity somewhat in check. Additionally, although total scrapped capacity this year could reach 200,000 TEUs, it will be a fraction of the 1.4 million TEUs of new capacity expected to come on line, according to The Journal of Commerce.
That extra capacity, combined with waning demand, endangers the recent rate increases carriers have forced. Growth in demand at main container ports slowed to 5 percent in the first quarter, shows an Alphaliner report. Carriers are expected to report another quarter of weak results, with higher fuel prices likely to offset increasing spot freight rates. Also hurting are the signing of contract rates at much lower levels than spot pricing.