New Ultra-Large Box Ships to Hurt Charter Rates

Ultra-large box ships, including 12 Maersk LIne Triple-E vessels, are on order

The addition of new ultra-large container vessels (ULCVs), as well as orders for more boxships in general, is putting pressure on charter rates, industry news site The Loadstar reports.

New ULCVs will be deployed on Asia-Europe routes, displacing 8,000 to 10,000 TEU vessels, which will mostly move to Transpacific trades, creating further cascades among the ships operating in that area, and potentially taking some ships out of action by the fall.

"The idle fleet is expected to remain low until October, when it should start rising again concurrently to the end of the peak season, as carriers are expected to suspend some loops and to skip sailings on certain other services," said analyst Alphaliner.

Chartered-in tonnage will be dropped from use when demand lessens, and charter rates will face more pressure, particularly for less economic panamax vessels.

Twenty-seven new containerships were delivered in July, and seven of those were ULCVs with nominal capacities of more than 13,000 twenty-foot equivalent units (TEU), bringing the total capacity delivered to more than 200,000 TEU, the highest monthly level since April 2011.

The 95 ULCVs now on order, including 12 Maersk Line Triple-E vessels, will add 1.5 million TEU to the global fleet.

At the same time, the proposed 2M alliance and acquisitions within the container market will mean more merged fleets making more efficient use of space, and thus reducing demand for more capacity.

Orient Overseas (International) Ltd. (OOIL) said its profits in 2013 were hurt by the cascading of tonnage into Transpacific trades and smaller routes.