Thursday, February 05, 2009

Idle Fleet Hits 800K TEUs



Idle Fleet Hits 800K TEUs
(Journal of Commerce – Bruce Barnard)


Idled ocean container capacity has reached a record 800,000 TEUs with 303 ships at anchor as carriers cut or consolidate services on key east-west routes amid declining traffic and freight rates. The unemployed figure represents 6.5% of the world fleet, twice the 3.2% recorded in the depth of the 2002 bear market, according to AXS-Alphaliner, a Paris-based consultant.

The idled fleet has grown by 48 ships of 125,000 TEUs in the past two weeks and is set to increase as carriers further retrench operations, Alphaliner predicts. On October 25, 2008, there were just 70 ships of 150,000 TEUs without work.

The jobless fleet includes nine vessels of between 7,500 TEUs and 10,000 TEUs capacity, 34 ships of 5,000-7,500 TEUs and 57 of 3,000-5,000 TEUs. The feeder sector remains the most vulnerable with 85 ships of 1,000-2,000 TEUs lying at anchor.

The rising number of unemployed vessels is reflected in the 15% reduction in total capacity on offer on the three main east-west routes over the six months to February 1, according to Alphaliner. Capacity has fallen from a weekly 916,000 TEUs to 780,000 TEUs.

The Far East-Europe trade has seen the deepest cuts, with capacity tumbling 21% to 333,000 TEUs from 418,000 TEUs.The closure of several service loops in December and January alone removed 50,000 TEUs of weekly capacity, which is now down to its lowest level since May, 2007.

Capacity on the Far East-North America trades has fallen 9% to 335,000 TEUs from 376,000 TEUs, and the Europe/Med-North America route is down 4.5% to 116,000 TEUs from 121,500 TEUs.

Commentary: A 15.6% increase in idleness in two weeks. This is set to double in severity if the rate of increase in idleness continues at 15.6% using the 60 divided by anything formula. Then we will have double the number of idled ships in about seven and a half weeks or the first week of April if we do not touch bottom. If the rate of idleness increases to say 20% we will have double the number of idled ships in the middle of the Ides of March. That would mean 13% of the worlds fleet and possibly 13% of all production and supply chain jobs in the world.

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