11 March 2024 (Lloyd's List) - CARRIER redeployments of tonnage have yet to see an increase in the average size of vessels on the Asia-Europe trades, despite the increased slot-cost savings that larger ships would generate on the longer Cape of Good Hope routing.

"Carrier services networks are slowly settling into the new reality of a round-Africa routing," said Sea-Intelligence chief executive Alan Murphy.

"Increased transit times are also now a part of this reality. With longer transit times on Asia-Europe, there is an opportunity for the carriers to deploy larger, more fuel-efficient vessels on average, to offset some of the increased fuel costs and reduce their slot cost."

Longer transit times mean an increase in fuel consumption, and hence an increase in the slot cost for the voyage. Deploying larger, more fuel-efficient vessels should bring this increased slot cost down.

But this would require high utilisation levels, as a half-empty 20,000 teu vessel would have higher slot costs that a full 10,000 teu vessel.

"This should be the case, as the longer transit times should absorb excess capacity and bring supply and demand much more in line than before," Murphy said.

But an assessment of carrier deployments over the past year, including the period affected by the effective closure of the Red Sea, showed the average and median sizes of vessels on the Asia-northern Europe and Asia-Mediterranean trades had stayed largely static.

The pandemic years had seen a fall in average sizes, as opportunistic niche carriers entered the trade on the back of soaring rates, which made the use of smaller vessels viable.

Since January 2023, the average vessel size had stabilised at 17,000 teu-18,000 teu on the Asia-northern Europe lane and 12,000 teu-13,000 teu on the Asia-Mediterranean.

"The average vessel size on Asia-northern Europe has seen moderate volatility, but the trend line is almost perfectly horizontal, meaning that trend is an unchanged average vessel size of approximately 17,700 teu," Murphy said.

"On Asia-Mediterranean, we see a clear upwards trend, but that started in the second half of 2023, well before the first Houthi attack in the Red Sea."

At an alliance level, the pattern held, with only The Alliance showing an increase in the median size of the ships it deployed. This, however, was an anomaly in that it suspended its FE5 service rather than reroute it around Africa, removing a loop with an average vessel size of 14,000 teu.

This left three loops with average vessel sizes over 20,000 teu and one with an average size of 8,700 teu, bringing up the median.

"The suspension of FE5-service does not constitute a direct upscaling of deployed vessels, in order to decrease average slot costs," Murphy said.

"But suspending the FE5-service still reaches this goal, by removing vessels with a lower average slot cost, raising the overall average slot cost of the remaining, larger vessels."

Non-alliance services had already started on an upwards trend in terms of the average vessel size, but this had accelerated in 2024.

"With longer transit times from the round-Africa routing on the Asia-Europe trade, there is an opportunity for shipping lines to offset the increased fuel consumption to some degree and reduce their average slot costs, by deploying larger, more fuel-efficient vessels," Murphy said.

"However, this generally has not been the case on either of the two Asia-Europe trades."