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© Kok Keong Ng

Sixty container vessels returned to owners by bankrupt Hanjin Shipping, yet to find new employment, havre pushed the idled container fleet to a new all-time record.

It now comprises 397 ships, amounting to 1.59m teu and equivalent 7.8% of the world’s cellular tonnage.

The containership charter market “remains in dire straits”, states Alphaliner in its latest market update, reporting that any charters being fixed are “at ludicrously low levels”.

And the bad news for shipowners doesn’t end there: with 1.7m teu of newbuild tonnage stemmed for delivery in 2017, ocean carriers will be off-hiring as much chartered-in tonnage as possible next year.

The top-ranked carriers see the charter market as a solution to periods of low demand and peak seasons, as they are able to secure or dispense with capacity as a short-term response to market fluctuations, and currently enjoy significant flexibility in terms of time charter and option periods.

Indeed, MSC charters 62% of its 2.8m teu fleet, while Maersk Line and CMA CGM charter 45% and 55% respectively of their tonnage.

Last week, Maersk Group chief executive Soren Skou said that if the Ocean Alliance and THE Alliance were to adopt a “conservative approach” to their tonnage requirements, it would be “very good for the market, but bad for shipowners”, who would see even more vessels off-hired.

In fact, one of the synergies driving the merger of the three Japanese carriers is rationalisation of tonnage. Currently, K Line charters 78% of its fleet, MOL 71% and NYK 47%.

Ocean carriers are simply no longer prepared, or need, to commit to long-term charters on any ships other than the largest, and this has dented the business models of some non-operating containership owners.

But the sector that continues to feel the most pain is the classic panamax, ships of 4,000-5,000 teu, for which hire rates have slumped to $4,250 a day from $5,000 in the summer, and $10,000 a year ago. And with only a slim chance of picking up a charter that would even cover operating costs, it is no surprise that around 40 panamax ships have already been scrapped this year.

According to this week’s demolition report from London shipbroker Braemar ACM, 165 vessels (591,000 teu) have been scrapped so far this year – a record for the industry. This compares with 63 ships (130,000 teu) at the same time last year, and 85 (187,500 teu) in the whole of 2015.

Alphaliner expects some 650,000 teu to be scrapped by the end of this year.

BIMCO chief shipping analyst Peter Sand said: “The demolition activity in the last three months surprised BIMCO, and it exceeded our initial expectation based on the appalling 2015 demolition activity.

“The advance is a push in the right direction, as demolition activity is one of the essential measures needed to rebalance the container shipping industry.”

On an optimistic note for the industry – but not necessarily for beleaguered shipowners – Mr Sand added: “Events in 2016 have shown that the tools to turn container shipping around are being used and are working. Recommendations to consolidate fleets and demolish ships are being taken seriously within the industry.”

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