Ocean carriers must do more to cut capacity: Drewry
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Drewry Shipping Consultants have slammed the actions of most container shipping lines for not doing enough to ease the situation of rampant overcapacity within the global cellular fleet.
Entitled, "Capacity Management - surviving the container crisis," the analyst report says reducing capacity by 15 to 20 per cent on Asia-Europe trades is not enough to arrest the decline in freight rates.
"The collapse of both demand and freight rates has put most trades into big loss-making territory and, in extreme cases (Asia-North Europe certainly being one), has meant that much of the cargo has been making a negative contribution to fixed service costs," said its author Neil Dekker.
"But carriers are still desperate to hold on to hard won market share, even when every extra container carried worsens the profit and loss account," said Mr Dekker in Newark's Journal of Commerce.
The Drewry report urges container shipping lines to cancel ships, scrap more older ones and lay up newer vessels also.
The problem with cancelling new ship orders is that the ocean liners are said to be reluctant to forfeit large initial down payments on their orders made in 2007, and shipyards are "playing hardball".
Drewry said it has identified a total of 48 vessels (with capacity of 249,000 TEU) or 3.5 per cent of total available capacity on the Asia-Europe trades that have been laid up, mainly in Asian ports. But it notes that many vessels have been cascaded elsewhere and in a number of cases two services have been amalgamated into one.
"This suggests that carriers are still reluctant to lay up vessels despite the desperate trading conditions and that other means of capacity management, though less radical, are more prevalent," the report said. "So far, no carrier has been bold enough to mothball a 10,000+ TEU newbuild."
Entitled, "Capacity Management - surviving the container crisis," the analyst report says reducing capacity by 15 to 20 per cent on Asia-Europe trades is not enough to arrest the decline in freight rates.
"The collapse of both demand and freight rates has put most trades into big loss-making territory and, in extreme cases (Asia-North Europe certainly being one), has meant that much of the cargo has been making a negative contribution to fixed service costs," said its author Neil Dekker.
"But carriers are still desperate to hold on to hard won market share, even when every extra container carried worsens the profit and loss account," said Mr Dekker in Newark's Journal of Commerce.
The Drewry report urges container shipping lines to cancel ships, scrap more older ones and lay up newer vessels also.
The problem with cancelling new ship orders is that the ocean liners are said to be reluctant to forfeit large initial down payments on their orders made in 2007, and shipyards are "playing hardball".
Drewry said it has identified a total of 48 vessels (with capacity of 249,000 TEU) or 3.5 per cent of total available capacity on the Asia-Europe trades that have been laid up, mainly in Asian ports. But it notes that many vessels have been cascaded elsewhere and in a number of cases two services have been amalgamated into one.
"This suggests that carriers are still reluctant to lay up vessels despite the desperate trading conditions and that other means of capacity management, though less radical, are more prevalent," the report said. "So far, no carrier has been bold enough to mothball a 10,000+ TEU newbuild."