Fall in lay-ups may be peak season hiccup

Following an unprecedented decline in world trade, owners were desperate to cancel or delay at least some of the huge amount of tonnage they had ordered.

Vessels unable to find employment were being idled in increasing numbers, reaching a peak in October and November 2009 when 576 containerships, equivalent to 1,186,832 teu, equivalent to just over 9% of the world fleet, were laid up.

A year and a half on and ocean carriers seem to be in recovery mode, with the dark days of 2009 behind them.

Earlier this month, CMA CGM posted first-quarter earnings of US$38m. In the same period last year the French container line lost US$26m.

The recovery in world trade has happened at a faster pace than had been expected.

Growth, anticipated to be single digits in the first quarter of 2010, was in fact 17%.

Figures for May show that Asia-Europe trade was up by 23% year on year over 2009.

In response to the recovery in world trade, carriers have reactivated some previously suspended services and introduced new ones.

Combined with slowsteaming strategies adopted by carriers, in part to reduce fuel costs, containerships are now being recalled to active service.

As of July 7, 2010, the number of cellular vessels in lay-up had fallen to 208, totalling 298,045 teu, just over 2.18% of the world fleet; a reduction of 75% over the past eight months.

Because resulting container shortages, carriers have been forced to bring ships back into service simply to reposition empty containers to Asia from elsewhere around the globe.

Whether the number of vessels in lay-up will increase significantly again after the peak season ends in October depends on factors such as forecast trade growth, the effects of newbuilding deliveries and the strategies adopted by the carriers.

Alphaliner, the Paris-based shipping consultancy, expects the number of laid-up containerships to again rise after peak season demand eases.

This suggests that by the end of the year there will once again be considerable surplus tonnage and analysts believe there could be as many as 500 vessels (up to 1m teu) idle once more.

This is an extract from a full review of container trade prospects to be published in Lloyd's List DCN next Thursday.