By Gavin van Marle

(The Loadstar) – The persevering with cost-per-slot supremacy of ultra-large container vessels (ULCVs) was known as into query by audio system ultimately week’s TOC Container Supply Chain occasion in Hamburg.

With bunker costs nonetheless at low ebb, and each day constitution charges at among the lowest ranges seen for a few years, the cascading of tonnage out of the Asia-Europe commerce by the introduction of 18,000 teu-plus vessels has resulted in a raft of huge tonnage being accessible to carriers at all-time low charges.

Andrew Penfold, director at Ocean Shipping Consultants, stated: “There are now a lot of 12,000 teu vessels coming onto the market at rates which disrupt the cost savings offered by ULCVs.”

Franck Kayser, senior director of operations and logistics at area of interest service NileDutch, added: “If you are taking 8,500 teu vessel now that was constructed 10 or 15 years in the past, there are loads of them that you could possibly repair at $6,500-$7,500 per day.

“If you compare that to a super fuel-efficient 14,000 teu vessel, and on today’s bunker rates, the slot cost is pretty much the same,” he added.

Continuing poor freight and constitution charges have been blamed by Mr Penfold on the trade overcapacity.

“This is as unhealthy because it’s ever been. Freight and constitution charges are nowhere close to break-even factors. How have we received right here? Partly by way of the over-optimism of carriers who thought there can be bigger volumes than there have been. The progress price is far slower than we had hoped and are available to count on.

“The financing of these ships is also an issue. At the moment, money is very cheap and lines are faced by the prisoner’s dilemma – for a particular line there is often a very strong and rational reason behind ordering vessels of these sizes, but when everybody does it the whole market can be turned right over, and at the same time some lines are investing for market share and not for profitability in the short term,” he stated.

He added that whereas the trade overcapacity had been brought on by the looks of ULCVs, different sectors, such because the 1,500-2,500 teu feeder sector was going through a scarcity of tonnage.

“Although the supply-demand balance varies for each particular vessel size, the massive overcapacity in the largest fleet sectors pushes down the earnings – there is very close correlation between underlying productivity (demand over supply) and earnings, and this link will continue and define market conditions in coming years,” he stated.

And even if past slow-steaming and the blanking of providers, traces seem to have few choices for capability administration, Mr Penfold advised {that a} new spherical of vessel ordering may happen after 2018, when Ocean Shipping Consultants expects provide and demand to have reached some degree of parity, with presumably even bigger vessels ordered.

“Bearing in mind that the economies of scale on a ULCV only work if it is full, the sums on a 24,000 teu ship would have per slot cost savings of 8-9% over the largest 18,000 teu ships we have at the present,” he stated.

He added that incentives from shipyards determined for orders from the trade had additionally performed its half within the current overcapacity.

“Shipyard capacity is also very high and money is cheap, which means there are some really good deals available for a line willing to place orders – and I think this is the most significant factor that has driven the additional ordering of ULCVs in the past 12 months or so,” he stated.

However, James Frew, senior analyst at Maritime Strategies International, reminded delegates that even with decrease ship costs, the monetary precariousness that many carriers discovered themselves in nonetheless meant ordering got here with loads of danger.

“You have to make a massive bet to make those investments. If you look at OOCL’s order for ULCVs, the value of the order was almost the same as the entire market cap of the company, so don’t forget the risk these companies are taking,” he stated.

The Loadstar is quick changing into recognized on the highest ranges of logistics and provide chain administration as among the best sources of influential evaluation and commentary.

Check them out at TheLoadstar.co.uk, or discover them on Facebook and Twitter.