With China’s COSCO confirming its US$1.5-billion order of 11 x 19 000 TEU ships for delivery in 2018, the “arms race” for Ultra Large Container Vessels (ULCV) of over 18 000 continues but carriers are having to be more creative when deciding where to deploy smaller deliveries, cautions maritime analyst, Drewry, in this week’s Container Insight report.
Cosco’s order means that there are now nine carriers who either have ships of this size currently in their fleet or on order. More are expected to follow as CSCL is reportedly on the verge of ordering 11 more ULCVs, while Japanese shipyard Imabari has also reportedly received an order for four 20 000-TEU units with an as yet unnamed owner.
According to Drewry, there is no going back as the industry has made it abundantly clear that they see these ULCVs as the future. But recent developments have exposed their inflexibility somewhat.
“The alarming drop in Asia to Europe traffic and a parallel crash in rates caused two of the big carriers groups to take the unprecedented decision to suspend services in the supposed peak season, while the two other alliances have been tinkering with missed sailings in order to try and support higher rate requests,” says Drewry.
The analyst points out that the inflexibility of the ULCVs that can’t operate in any other trade besides the Asia-Europe lane makes it very hard for carriers to react to fluctuating demand and juggle ships accordingly.
All of the 10 000 TEU+ newbuilds delivered this year to the end of August have been deployed in Asia-Europe, but it’s where carriers are putting the ships of between 8 000-10 000 TEU that reveals how they are trying to spread the burden of the new capacity as thinly as possible to avoid contaminating too many other trades.
“It is a delicate balancing act but by distributing the new ships widely they do at least give themselves the chance of maintaining some level of balance. Ultimately though, the equation is unsolvable as there is simply not enough cargo to fill all of the ships,” says Drewry.
New ship capacity results in major juggling act
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