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Aug 04 2016

Recent decisions by a number of carrier alliances to suspend two transpacific loops at the start of the peak season, rather than at the end of it, was a signal that containership idling was on the rise, according to analysts at Drewry Research Services.

Increased idling of boxships has happened on a larger scale than in previous years. Over 300 containerships, with a combined capacity of more than 800,000 teu, were idle in early July, in what is usually the start of the Asian export peak season. In July of the two previous years, less than a quarter of this capacity was idled. This unusual market development could be explained by several factors - Market sources indicate that the peak season in the transpacific is weak; a combination of low freight rates and slow demand has played a part in the unusual decision of carriers to lay up ships in July. It is also speculated that carriers are trying not only to park unused capacity but also to bring spot rates back up by increasing load factors on remaining active ships.

An increasing number of classic panamax ships with capacities of 4,500 teu-5,000 teu are now idle, following the opening of the expanded Panama Canal and more surprisingly, even the quieter, smaller ship segment of less than 3,000 teu is seeing a trend towards inactivity. Until recently, it was felt that few smaller ships were being ordered and delivered into the market, reducing the risk of overcapacity in this segment. It is noted that there has now been no increase in the small-ship global capacity requirement. The intense competition and overcapacity of the intra-Asia market, where a high proportion of smaller vessels are employed, explain part of this change.

In the past two years, the active fleet for ships of less than 3,000 teu and for 3,000 teu-5,000 teu has decreased in absolute teu capacity. Only the active fleet of the 8,000 teu+ ships has increased.

As a percentage of the global fleet, the idle fleet this peak season represents about 4%, despite the increase in demolitions, up from just 1% this time last year.

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