Active capacity grows 21pc to 14 million TEU in January

THE active global containership fleet has increased 21 per cent from 11.55 million TEU in January 2010 to 13.94 million TEU at present after adding 1.39 million TEU, involving the reactivation of 1.18 million TEU of last year`s idle capacity, according to Alphaliner.

This has lead to a decrease of idle capacity from its pinnacle of 1.51 million TEU in January 2010 to 326,000 TEU a year later. Scrapping and deletions have also contracted from 381,000 TEU in 2009 to 184,000 TEU last year.


But fourth quarter 2010 showed a slowdown in the growth of utilisation levels despite vigorous recovery in demand had been seen in the first three quarter.


Average utilisation levels on the main trade lanes fell from a ceiling of 95-100 per cent between May and August 2010 when shippers were confronted with capacity constraints between the Far East and the west, to a projected 80-85 per cent in December.


Growth rates slowed in December with Shanghai, the largest container port in the world today, posting 3.2 per cent growth, and Singapore, the second largest post, only 3.8 per cent in their latest monthly reports.


In October, Alphaliner estimated idle fleet to increase to 700,000 TEU at the end of 2010 for the good sake of supply-demand balance.


Looking back at the outset of 2011, the actual idle capacity did not even reach half of this figure because the carriers had been unwilling to reduce more capacity in the winter period. This resulted in a surplus.


Another effect of this was carriers` failure to carry out their planned rate increases for a US$200-300 per TEU on Asia-Europe trade and a peak season surcharge of $320/$400/$450 per TEU, FEU and 40-foot high cube respectively on January 1 due to poor utilisation levels.


So far, carriers are paying attention to the expected increase in pre-Chinese New Year volumes in January to implement part of the rate increases.


Still, Alphaliner said carriers cannot maintain any rate increase in February because the current overcapacity conditions do not encourage this to happen.


The present market situation is opposite to the one 12 months ago. Carriers were then able to raise full rates on both the Asia-Europe and transpacific loops because of significant volume recovery after experiencing severe capacity decline in 2009.


Rates on all main trade lanes from the Far East are under pressure now because of overcapacity concerns, said Alphaliner.


Such rate reductions are not only confined to Asia-Europe and North American strings now, but have spread to services to South America, Africa, Australia and the Middle East because of seasonal slowdown.


As a result, freight rates are expected to be soft for the whole 2011 as it is still doubtful whether carriers will have determination to reduce capacity.