Since the second half of last year, the global container transportation industry has shown signs of recovery, and most shipping companies have gradually turned losses into profits. Recently, both Delta Shipping and Mediterranean Shipping have confirmed the construction of new ships, sparking renewed concerns in the industry about overcapacity. According to Reuters, Alphaliner, a French shipping consulting firm, conducted a relevant analysis of the supply and demand situation in the global container shipping market and expressed optimism that the container shipping market is expected to achieve supply and demand balance by the end of 2019.
Alphaliner stated that the delivery of 1.6 million TEU of new capacity in the fourth quarter of this year will exacerbate the current oversupply situation. At present, there are 147 idle container ships, totaling 275900 TEUs, setting a new low in idle container capacity in the past two years. However, with the delivery of new ships in the fourth quarter of this year, it is expected that the idle container capacity will increase to 800000 TEUs. That is to say, in the next three months, the global container capacity increase caused by the delivery of new ships worldwide will exceed 300000 TEUs. Even if the dismantling volume of ships is taken into account, these new capacity increases will undoubtedly further exacerbate the supply side pressure of the container shipping market.
However, since July this year, steel prices have significantly increased, with prices at the end of July only at $350/LDT, compared to $425/LDT, which may attract more shipowners to dismantle their ships.
According to data from London shipping brokerage firm Braemar ACM, 16 container ships have been sold at dismantling prices in the past 30 days. This year, a total of 131 container ships have been dismantled, totaling 380000 TEUs; However, the data for the same period last year was only 119 vessels, totaling 407500 TEUs. Despite the arrival of the off-season in the winter container transportation industry, liner companies have suspended certain route services. Container ship brokers also say that during the peak container season, the number of charter ships decreases.
Alphaliner also stated that the current decline in China's freight rates may prompt shipping companies to adopt more aggressive measures to protect the freight rates of the upcoming Asia Europe contract. In the traditional peak season of shipping, major shipping companies reintroduced too much production capacity during the peak season, resulting in a decrease in tariff prices for all routes in Asia.
In addition, Alphaliner warned that the container transportation market will experience "rate volatility" next month, and stated that the cancellation of voyages due to China's National Day Golden Week is not enough to offset the decline in demand. As winter approaches, major shipping companies should significantly reduce production capacity, but so far, shipping companies have chosen to significantly reduce freight rates
Based on the current volume of ship dismantling, Alphaliner predicts that by the third quarter of 2019, the demand in the container shipping market will be able to meet the supply of transportation capacity, ending the nearly 10-year overcapacity situation. However, it is worth noting that due to the expected delivery of new shipbuilding orders from DaFei and Mediterranean in the second half of 2019, the above supply and demand balance may only be a brief spring in the container shipping market.