SIMIC

WITH an increasingly pessimistic cargo demand outlook, ocean carriers are said to be in talks with shipyards to defer delivery dates for some of the 2.3 million TEU of newbuild tonnage due this year.
Shipbuilding contracts usually incorporate a clause to facilitate the pushback of completion by six months or more, depending on the stage of construction and pressure from other orders, according to London's Loadstar.
But with the container liner industry facing several challenging quarters, the yards may be quite relaxed about rescheduling delivery dates and the postponements will focus on smaller sizes. These are now competing for employment with tonnage usurped by the arrival of newbuild 24,000 TEU ULCVs on the Asia-North Europe trade.
Shipping line procurement officers also have been instructed to halt orders for new containers and return as much leased equipment as possible to ease the huge storage costs from the empty-container mountains overwhelming depots around the world.
Indeed, container depots will remain overstocked in the first quarter, according to online shipping container platform, Container xChange. CEO Christian Roeloffs added: "There is just not enough depot space to accommodate all the containers.
A double-whammy of a demand collapse and consequential easing of port and landside congestion at container hubs has caused a massive reversal in supply-demand fundamentals.
According to the latest Drewry Container Forecaster supply-demand index, the market will see a huge shift in balance to a position of 19 per cent below equilibrium.
Nevertheless, the maritime analyst said, it anticipated capacity reductions - expected to become more aggressive after the Chinese New Year - would keep top line fleet growth to "a relatively shallow" 1.9 per cent.
Carriers may benefit from a tailwind of higher contracted revenue in Q1, but with the expiry of the old agreements and new deals being set at much lower rates, the P&L accounts for the industry seem set to be much less healthy.