• ITVI.USA
    13,714.340
    -40.170
    -0.3%
  • OTRI.USA
    21.930
    0.010
    0%
  • OTVI.USA
    13,686.380
    -35.040
    -0.3%
  • TLT.USA
    2.840
    0.000
    0%
  • TSTOPVRPM.LAXDAL
    2.280
    -0.210
    -8.4%
  • TSTOPVRPM.PHLCHI
    1.900
    -0.070
    -3.6%
  • TSTOPVRPM.LAXSEA
    2.720
    -0.270
    -9%
  • TSTOPVRPM.ATLPHL
    2.480
    -0.170
    -6.4%
  • TSTOPVRPM.CHIATL
    3.070
    -0.210
    -6.4%
  • TSTOPVRPM.DALLAX
    1.370
    -0.090
    -6.2%
  • WAIT.USA
    127.000
    0.000
    0%
  • ITVI.USA
    13,714.340
    -40.170
    -0.3%
  • OTRI.USA
    21.930
    0.010
    0%
  • OTVI.USA
    13,686.380
    -35.040
    -0.3%
  • TLT.USA
    2.840
    0.000
    0%
  • TSTOPVRPM.LAXDAL
    2.280
    -0.210
    -8.4%
  • TSTOPVRPM.PHLCHI
    1.900
    -0.070
    -3.6%
  • TSTOPVRPM.LAXSEA
    2.720
    -0.270
    -9%
  • TSTOPVRPM.ATLPHL
    2.480
    -0.170
    -6.4%
  • TSTOPVRPM.CHIATL
    3.070
    -0.210
    -6.4%
  • TSTOPVRPM.DALLAX
    1.370
    -0.090
    -6.2%
  • WAIT.USA
    127.000
    0.000
    0%
American Shipper

As idle fleets grow, ship prices hold steady

As idle fleets grow, ship prices hold steady

   A glut of capacity in the liner carrier industry might only be helped if lines are able to convince shipyards to push back orders of ships to be delivered over the next three years.

   As American Shipper has reported, the number of container vessels being laid up has risen dramatically in recent weeks. As of Tuesday, the idled fleet reached 750,000 TEUs, the most in more than 20 years.

   That might lead to speculation that shipyards are in for a tough few years, with limited orders and delay requests, if not outright cancellations.

   But it may not lead to price cuts.

   'To our knowledge yards have made little attempt to drop asset prices since berth coverage is still pretty healthy at up to three years,' Neil Dekker, editor of the Container Forecaster at Drewry Shipping Consultants, told American Shipper this week. 'If cancellations across all sectors become more of an issue this year it may well be that at some time the big yards are more tempted to drop prices in an effort to lure container operators back into ordering. But apart from this, ship finance and credit from the banking sector still remains an issue.'

   Dekker said the price to build ships has not come down, yet.

   'Asset prices for newbuilds have remained pretty high of late,' Dekker said 'Most brokers are not even attempting to put a price on post-Panamax and super-post-Panamax vessels at the moment since the market is dead. In theory, since there is absolutely no demand for super-post-Panamax tonnage, they are effectively worthless.'

   It's been reported in trade journals recently that carriers who have ships with capacity of 12,000 TEUs and higher are attempting to delay such deliveries or negotiate lower prices. But those requests have mostly been rebuffed.

   'German ship owner Claus-Peter Offen, who will be in South Korea next week to ask for a postponement on four of the 18-strong series of 14,000 ships on order, said this week that shipyards would have to reduce production, with a cut in global shipbuilding capacity of around 40 percent necessary to bring the market back into balance,' Lloyd's List reported Jan. 16.

   Might 2009 represent a good time for the few carriers who haven't ordered the past three years to do so?

   'Container operators may be tempted to order if prices come down, but they will be wary of what happened in 2007 when ordering activity was crazy,' Dekker added. 'Ordering ships at a 'good' price is not necessarily a healthy long-term strategy as delivery needs to coincide with a strong market. And of course what everyone else is doing at the same time will have a major bearing. History shows us that in general carriers have tended to buy when asset prices have been low in the hope that when they are deployed, the market will be strong.'

   The issue of overcapacity could become bigger this year as capacity is set expand a further 14 percent, making shipbreaking across all categories a distinct possibility.

   Also pressing the issue is the fact that low oil prices could actually hinder carriers' ability to utilize more of their fleets through slow steaming. Carriers had been able to introduce one or two extra ships into eight-ship strings when oil prices skyrocketed in the summer. That enabled carriers to more efficiently use fuel, but it also served as a way to employ ships that would now be idled due to poor demand.

   With bunker now about $260 per ton in major European ports, it could throw the entire slow-steaming strategy out the window. Analysts have figured that anything approaching $200 a ton and carriers would reap no rewards from the fuel efficiency benefits of slow steaming. ' Eric Johnson