Home » Breaking News, Maritime » Mega-ship orders weakening rate hike resolve

New orders for ultra-large container vessels (ULCVs) are undermining attempts by carriers to solve the capacity overhang, according to Drewry’s monthly report “Sea & Air Shipper Insight.”

This development emerges as China Shipping Container Lines (CSCL) announced it will buy five 18,000-TEU (20-foot-equivalent unit) ships, only the second liner operator after Maersk Line to place orders for these fuel-efficient ULCVs.

South Korean shipbuilder Hyundai Heavy Industries recently won the contract from CSCL to build the mega ships that will be deployed on the Asia-Europe trade lane. Maersk Line, on the other hand, is scheduled to receive the first of its 20 triple-E ships in the middle of this year.

“However, while these latest new orders won’t actually hit the water for years, their psychological impact is to keep the focus on capacity and the big question of how on earth carriers will be able to absorb it all,” said Drewry.

“Ocean carriers did a decent job over the winter months balancing supply to ensure that freight rates remained relatively firm, but the delivery of big new ships—leading to new services and upgrades of existing loops—will mean lines will find that task increasingly difficult for the remainder of 2013,” said Simon Heaney, research manager at Drewry.

“These new orders and speculation of more to come could be having a negative impact on rates right now. Carriers cannot shift the paradigm from the supply pressure they are facing so that they can get rates moving upwards again,” added Heaney.

Currently, ocean freight rates are tumbling, with Drewry’s East-West Index contracting by 5.6 percent month-on-month in March.

Similarly, airfreight rates fell in March following February’s short-lived recovery, as the traditional spring season sales rush in northern hemisphere markets failed to materialize.

Drewry’s East-West Air Freight Price Index slid 5.3 points in March to 96.9 points, weighed down by sharp falls in pricing from Shanghai to both North America and Europe.


Photo: vsmoothe

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