Cargo Business Newswire

Thursday, April 17, 2014

Top Story

Drewry: Shipping lines absorb capacity as shippers wait for goods

Shipping lines have done a good job of absorbing excess capacity lately using slow steaming and idling ships, which means shippers are waiting longer for goods to arrive, according to the latest issue of Container Insight by Drewry Maritime Research.

Slowing down means longer round trips, and longer round trips mean more vessels. For example, Container Insight said, approximately 250 ships with average capacities of 11,000 TEUs are needed today for 22 weekly westbound Asia-North Europe services.

Drewry said prior to the slow steaming trend, Asia-North Europe trades deployed an average of eight ships traveling at 24-25 knots. The researchers say that currently the average on this service is 11 ships that cruise at around about 17 knots.

If not for slow steaming, the publication said, that trade could run with eight ships rather than 11, and then only 180 ships total would be needed to run the same number of loops. This means that shipping lines have effectively absorbed 70 or so ships in that trade alone, according to Drewry.

And although shipping lines use it as a last ditch solution, idling ships is another tool being used to tame over-capacity. The Container Insight story estimated approximately 3 percent of the fleet is currently idled, with non-operating owners baring most of the burden.

The article asserts that although container carriers have done a good job at absorbing capacity, there are doing it through sub-optimal use of their assets, and the policy hurts shippers. The researchers conclude the growing number of new ship orders means that ocean carriers must strengthen efforts to address the vessel glut, and shippers must make peace with longer cargo transit times.