2015 Will See a Record Inflow of Newbuilt Tonnage: Bimco

Half of all the new ships are bound for a future on the Asia to Europe trading lane.

BIMCO this week says an estimated record inflow of 1.6 million twenty-foot equivalent units (TEU) of capacity in newbuilt tonnage accomplished by less than 200 ships will be delivered by the end of this year.

The organisation says this is the result of container ship owners cutting unit costs by introducing bigger vessels, pushing the average size of newbuilds in 2015 to 8,400 TEU from 3,435 TEU in 2008.

Although owners have divested themselves of 553 ships with a combined capacity of 1.1 million TEU over the past three years, BIMCO notes that so far this year only 51 ships with a combined capacity of 94,000 TEU have been scrapped.

Overall fleet growth will reportedly reach 7.3 percent, the highest in four years and surpassing demand growth.

However, the institute points out that Northern European imports this year fell by 3.6 percent, while the East Mediterranean and Black Sea imports fell by 4.8 percent, and although BIMCO describes Intra-Asia shipment growth of 4-5 percent as "a stronghold", increased uncertainty surrounding economic development in China "adds doubt as to whether such a strong growth rate can be sustained for the full year." 

With regard to exports from China, BIMCO says the index value of China Containerized Freight Index (CCFI), which covers ten major Chinese ports and includes both long-term contractual and spot freight rates, this year dropped for the first time below 800.

BIMCO states: "As volumes drop and new ships are introduced on a weekly basis, it's even more difficult to strike the balance that will see freight rate improvements."

Given that sustainable freight rates on high volume trades is required for profitability in the low-margin business of container shipping, BIMCO is concerned by the lack of European demand and predicts that in the long term, "half of all new ships are bound for a future on the Asia to Europe trading lane, cascading the present work horses onto other trading lanes."

In September, BIMCO stated that while low demand in the container shipping industry's high volume trade lanes is putting pressure on carriers' earnings, demand on Intra-Asia will stay positive and new demand may arise from Iran, Cuba, Brazil, and Africa.