Ocean carriers have raided the idle containerships fleet to bolster their peak season offerings, reducing the cellular capacity of vessels in lay-up to a two-year low.
According to Alphaliner data, capacity in hot or cold lay-up has fallen sharply in past weeks: by 94,000 teu in 14 days to 151 ships for a capacity of 377,925 teu as recorded on 21 August.
This represents just 1.8% of the global containership fleet and includes vessels that await scrapping.
The analyst attributes a spike in charter activity to “buoyant demand across all trades, including north-south routes”.
Indeed, there are now no spot vessels available of 12,000 teu and over, and of the six showing as available in the 7,500-11,999 teu range most are expected to be deployed in the coming weeks to meet a strong peak season demand.
Even the unemployed pool of classic 4,000 teu panamax vessels is shrinking after new services between Asia and West Africa reduced the number of ships seeking employment to 19, from 25 a fortnight ago.
And demand in all sectors is expected to remain strong next month, ahead of Chinese national holidays in the first week of October.
As a consequence, daily hire rates have improved for non-operating containership owners; although they “still fail to impress”, said Alphaliner, adding hire rates were only rewarding for owners that had purchased tonnage at “broken prices”.
Meanwhile, after a dip in activity in recent months, the demolition market is said to be “firming quickly”. London-based shipbroker Braemar ACM reports Indian breakers are prepared to pay as high as $425/Ldt for container vessels that might previously have only commanded $300. The 1998-built 2,226 teu geared ER Hamburg recently sold, basis delivery Alang, for $420/Ldt.
The improved rate for recycling could reignite the interest of shipowners frustrated by the failure of charter rates to return to levels that at least cover operating costs, even with the strong demand.
After a very bullish start to the year, which threatened to overtake the 2016 all-time scrapping record of 660,000 teu, the demolition market slowed markedly in the summer as shipowners were encouraged by the prospect of employment in the charter market.
According to the latest data from Braemar, the demolition total for this year so far is some 345,000 teu for 118 vessels. This compares with 102 for 350,000 teu scrapped in the same period of 2016.
The outlook for the demo market, charter market, container freight rates and, indeed, the profitability of ocean carriers will hinge on the strength of demand after the Chinese holiday.