Box fleet up 8.5pc in 2011 but first half orders down on misread demand

THE capacity of the container equipment fleet increased 8.5 per cent during 2011, taking the global fleet to 31.25 million TEU, compared with seven per cent growth in 2010, according to Drewry Maritime Research's Container Census 2012.

The container equipment fleet grew more than expected last year even though new ship orders plunged in the second half and liner companies stopped ordering new containers.

The report says that up to 70 per cent of 2011 net additions were made in the first six months of the year, before the decrease in new ship orders put a damper on container orders. As a result, the price of new dry containers has been volatile, said Drewry analysts.

The report points out that the slowdown in the latter half of 2011 was an apparent misreading of demand. Few buyers predicted an oversupply of 900,000 TEU in mid-2011, and more than 500,000 TEU by the end of 2011, which was exacerbated by a weak peak season. But utilisation of the in-service fleet maintained a very high level, topping 95 per cent.

One effect of the high utilisation rate is that container-to-slot operating levels have dropped to historic lows, close to 1.8:1 in 2010 and 2011, compared with 2:1 before 2009.

This has occurred because shipping companies are working their assets harder, which, considering the increasing container dwell times resulting from slow-steaming, is something of an achievement, said Drewry's Andrew Foxcroft, author of the Container Census.

Mr Foxcroft forecasts annual container fleet growth will be at around seven per cent from 2012 to 2015 as shipping companies continue to adopt a tight container/slot operating ratio, while also increasing replacement purchases at a faster rate than in 2010-2011.

The growth in the container equipment fleet since 2009 has been dominated by leasing companies that posted growth in their TEU count of 10.6 per cent in 2011 and nine per cent in 2009, while orders by shipping lines and other transport companies only increased seven per cent and 5.7 per cent. Investment by shipping lines, in particular, was curtailed when their profits slumped and debts rose. Some lines have tentatively resumed equipment investment, but they are still very much testing the waters, he said.

"The outlook is for pricing to stay high, with the annualised forecast holding at US$2,500 for 2012 and 2013," Mr Foxcroft said.