Drewry cites ‘psychological impact’ of big ship orders

   Attempts by container carriers to tackle surplus capacity are being undone as new orders for ultra large container vessels (ULCVs) make the headlines, said London-based Drewry, in a press release announcing its most recent Sea & Air Shipper Insight report.
   “Ocean carriers did a decent job over the winter months balancing supply to ensure that freight rates remained relatively firm, but the delivery of big new ships – leading to new services and upgrades of existing loops – will mean lines will find that task increasingly difficult for the remainder of 2013,” said Simon Heaney, research manager at Drewry.
   Drewry pointed to reports that China Shipping Container Lines will join Maersk in ordering five 18,000-TEU ships is further proof of the demand for these fuel-efficient ULCVs among the major lines. In January, Lloyd’s List reported that United Arab Shipping Co. also had expressed interest in possible purchase of similar size ships.
   Drewry said “while these latest new orders won’t actually hit the water for years, their psychological impact is to keep the focus on capacity and the big question of how on earth carriers will be able to absorb it all.”
   “These new orders and speculation of more to come could be having a negative impact on rates right now. Carriers cannot shift the paradigm from the supply pressure they are facing so that they can get rates moving upwards again,” Heaney added.
   Drewry said ocean freight rates are tumbling with its East-West Index contracting by 5.6 percent month-on-month in March. It also said its East-West Air Freight Price Index “slid 5.3 points in March to 96.9 points, weighed down by sharp falls in pricing from Shanghai to both North America and Europe.” – Chris Dupin