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Box volumes grow 3pc in 2016 to 181 million TEU, but rates still weak
CONTAINER shipping freight rates remained generally weak in 2016, and the SCFI Composite Index averaged 18 per cent lower last year than in 2015.
But by late in the year it did appear that spot freight rates might be bottoming out on some trade lanes, Clarksons Research's 2016 liner market review shows.
Against this backdrop, charter market vessel earnings remained at bottom of the cycle levels. The one-year rate for a 2,750-TEU ship averaged US$6,000/day in 2016, 37 per cent lower than in 2015. Old panamaxes fared even worse, averaging $4,979/day in 2016, 58 per cent down on 2015, following the opening of the expanded Panama Canal.
Nevertheless, sector fundamentals did appear a little more positive in 2016. Demand conditions improved, with global volumes expanding by an estimated three per cent in 2016 to 181 million TEU, reported New York's Marine Link.
Volumes in the key Far East-Europe trade returned to positive growth and the rate of expansion on intra-Asian trades accelerated back to more robust levels.
But North-South volumes and Mideast trade into the Middle East remained under severe pressure from the impact of diminished commodity prices, though volumes into the Indian subcontinent grew strongly.
Meanwhile, containership capacity growth slowed significantly in 2016, reaching just 1.2 per cent in the full year. Deliveries fell dramatically to 900,000 TEU, from 1.7 million in 2015, and demolition accelerated rapidly to a new record of 700,000 TEU.
At the end of 2016, seven per cent of total containership fleet stood idle. The financial collapse of major Korean operator Hanjin was a further illustration of the acute distress facing both operators and owners.
Demolition hit a new record, and financial distress and regulatory requirements are expected to drive further recycling. The ordering of newbuild capacity dropped to just 200,000 TEU in 2016.
Meanwhile, further significant steps in the consolidation of the sector were taken in the form of merger and acquisition activity involving major operators. The top 10 now deploy 70 per cent of all box ship capacity, a figure set to rise to 80 per cent.
But by late in the year it did appear that spot freight rates might be bottoming out on some trade lanes, Clarksons Research's 2016 liner market review shows.
Against this backdrop, charter market vessel earnings remained at bottom of the cycle levels. The one-year rate for a 2,750-TEU ship averaged US$6,000/day in 2016, 37 per cent lower than in 2015. Old panamaxes fared even worse, averaging $4,979/day in 2016, 58 per cent down on 2015, following the opening of the expanded Panama Canal.
Nevertheless, sector fundamentals did appear a little more positive in 2016. Demand conditions improved, with global volumes expanding by an estimated three per cent in 2016 to 181 million TEU, reported New York's Marine Link.
Volumes in the key Far East-Europe trade returned to positive growth and the rate of expansion on intra-Asian trades accelerated back to more robust levels.
But North-South volumes and Mideast trade into the Middle East remained under severe pressure from the impact of diminished commodity prices, though volumes into the Indian subcontinent grew strongly.
Meanwhile, containership capacity growth slowed significantly in 2016, reaching just 1.2 per cent in the full year. Deliveries fell dramatically to 900,000 TEU, from 1.7 million in 2015, and demolition accelerated rapidly to a new record of 700,000 TEU.
At the end of 2016, seven per cent of total containership fleet stood idle. The financial collapse of major Korean operator Hanjin was a further illustration of the acute distress facing both operators and owners.
Demolition hit a new record, and financial distress and regulatory requirements are expected to drive further recycling. The ordering of newbuild capacity dropped to just 200,000 TEU in 2016.
Meanwhile, further significant steps in the consolidation of the sector were taken in the form of merger and acquisition activity involving major operators. The top 10 now deploy 70 per cent of all box ship capacity, a figure set to rise to 80 per cent.
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