Box fleet growth stalls as scrappings surge

The containership liner fleet growth has almost stalled during the past few weeks as ships are joining scrap yards in droves while newbuilding deliveries are ebbing according to Alphaliner.

Over the month of July, the total container capacity deployed on liner services has increased by 7,000 teu only, according to Alphaliner records. It is the worst month-to-month figure recorded since it started to track the global liner fleet growth ten years ago. The cellular fleet itself has increased by only 20,000 teu in July, with 15

cellular ships totalling 73,600 teu being completed in July while the cellular tonnage reaching scrapping spots surged to 34 ships for 54,000 teu within the space of one month. Furthermore, multipurpose (uncelled) tonnage is leaving the liner trades either to be redeployed as tramps or to be scrapped.

The cellular ship orderbook has fallen to a level corresponding to 41% of the existing fleet and stands now at 5.26 Mteu, according to Alphaliner figures, its lowest level during the past 24 months in teu terms. In relative terms, a peak at 64% of the existing fleet was reached in November 2007. Readers will have to go back to January 2004 to find a 41% ratio. Not a single containership was ordered during the past ten months, an unprecedented situation.

The cellular fleet currently stands at 4,690 ships totalling 12.82 Mteu (of which 10.3% are currently lying idle or laid up). The fleet is expected to grow by 9.8% during 2009, based on current figures before scrapping. Net growth is likely expected to be less than 9% if expected scrapping is included for the remaining of the year, while slippage will also dent this growth.

This week, Zim became the latest carrier to announce the deferment of deliveries for 14 ships ordered at various yards by between two to three years, as it struggles to cope with a cash flow crisis brought about by the downturn and its overly ambitious expansion plan. The Israeli carrier is by no means the only company affected as

several completed newbuildings are currently lying at yards, undelivered for

various reasons.

Meanwhile, several existing orders have been cancelled or at least work was suspended on some of them due to lack of funds to finance their construction, while several series of ships have been deferred. Alphaliner counts 165,000 teu of cancellations since the crisis started to unfurl in September 2008, with the latest ones logged last week for a series of ships of the 2,500 teu class. Ironically, most of the orders recently cancelled or suspended due to lack of funds (where they are disclosed) fall in the less than 4,000 teu size, for which the orderbook represents only 11.3% of the existing fleet. This compares against 62.8% for ships over 4,000 teu. So if orders make a comeback, it will be first for small containerships.

Meanwhile, scrapping of cellular tonnage for the year to date will reach the 250,000 teu mark this week, with full year scrapping level expected to exceed 350,000 teu ? the figure could have been higher if some elderly ships were not locked into charters expiring in 2010 or later. This would be almost three times higher than the previous level of annual scrapping.