8 November 2023 (Lloyd's List) - CONTAINERSHIP overcapacity will not come under control until the 3m teu of capacity more than 20 years old makes its way to the recycling yards.
Figures from Alphaliner indicate there are 1,200 vessels, comprising 2.9m teu, aged 20 years or older. While this represents around 10% of global capacity, it also accounts for a fifth of the 5,890 vessels in service.
“This suggests that most of these older ships are relatively small by today’s standards, with only 314 vessels having capacities of 3,000 teu and above, while 886 vessels have capacities below 3,000 teu,” Alphaliner said.
But despite the excess capacity in the market, just 70 ships, comprising 140,000 teu, have been sent for scrap this year, leaving a large pool available for removal.
But the trend towards ever larger newbuilding tonnage has left little modern smaller tonnage in the market, and as the existing ships are still in good technical condition, they are kept running in trades where there is no alternative tonnage, Alphaliner said.
Nevertheless, it expects the downturn in the sector will put pressure on non-operating owners, particularly owners of small and midsize units in the coming months.
“Many of these older ships, especially those without scrubbers, could thus be forced to gradually exit the trade or be relegated into some second-tier markets with fewer and less remunerative employment possibilities,” Alphaliner said.
“That could potentially benefit scrapping in some way, a welcome development in view of the current massive deliveries of newbuilding tonnage.”
But even if the entire 20-year-old and older fleet were removed from the market, it would not even compensate for the 2.3m teu of capacity delivered this year alone, far less the further 5m teu that is on order for delivery over the next two years.
“Recycling in the 20-year-old and over age group will need to be much more ambitious to have any tangible impact on the fast-rising overcapacity,” Alphaliner said.
Despite the fact that carriers are most directly affected by overcapacity, it is carriers that have the largest fleets of ageing vessels.
Mediterranean Shipping Co, which went on a buying spree for anything that floated during the pandemic, has 212 vessels comprising 718,000 teu of capacity that fall in to the 20-year-old and over category, according to Alphaliner data.
“Quite remarkably, 145 of the 330 secondhand liner vessels that MSC bought since it embarked on a historic buying spree in August 2020 are cellular container vessels aged 20 years and older,” Alphaliner said.
