Service cuts leave containerships idle

The Ocean Alliance has joined 2M and The Alliance in reducing the number of transpacific loops it offers, as tariff threats see tonnage returned.

News ID: 80130

Date: 19 July 2018 - 12:25

SERVICE cuts across several major trade lanes have led to an increase in the number of idle ships as owners return surplus tonnage amid falling demand.

The amount of containership capacity sitting idle rose to 305,594 teu this week, according to figures from Lloyd’s List Intelligence. That represents 1.5% of total fleet capacity.

The reduction in services, which has seen three transpacific service withdrawals over the past month, will remove 21,000 teu from the route, comprising 6.7% of transpacific capacity, according to Alphaliner, and reflects a “worsening demand outlook”, and are being made in the context of increasing trade tensions in the China-US tariffs war.

“Further service cutbacks on the transpacific and the Middle East routes will add further pressure to the burgeoning pool of idle ships in the coming weeks,” Alphaliner said.

It added that while the planned launches of several new services on the transatlantic and Asia-Australia trades in July and August will help remove some of the surplus ships, the forecast “remains bleak” as the summer peak season has failed to boost overall demand for tonnage.

The Ocean Alliance, comprising CMA CGM, Cosco, Evergreen and OOCL, has joined the 2M and The Alliance in removing tonnage from the transpacific trade in an effort to boost utilisation rates.

Despite the recently announced capacity reductions, overall transpacific capacity from the Asia to both the US east and west coasts is still higher than a year ago.

“Total weekly capacity is expected to reach 450,000 teu in September 2018, compared with 441,700 teu in 2017 for a year-on-year increase of 1.9%,” Alphaliner said. “However, the rate of growth has slowed significantly and is from the 8.4% increase recorded in April.”