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More freight rate volatility on horizon amid overcapacity: analyst

GLOBAL idle containership capacity has contracted by 28 per cent in the past two weeks to 696,000 TEU, according to Alphaliner. Its analysts now predict that the laid-up boxship fleet will fall back to 500,000 TEU by June.

Alphaliner attributed the dramatic "sharpest-ever decline" to a "scramble" by carriers to implement their new container shipping alliance networks on April 1, reported London's Load Star.

The latest weekly data from London shipbroker Braemar ACM records the total number of vessels scrapped this year at 85, for a combined 268,000 TEU, with the demolition market on course to eclipse last year's record of 189 ships for a combined 658,000 TEU.

So far this year, 43 newbuilds have been delivered, adding to a total capacity of 287,500 TEU, reflecting the emphasis on big ships in yard orderbooks.

Meanwhile, the 204 ships remaining idle as of April 17, representing 4.8 per cent of the global fleet, compares with the 351 vessels for 1.4 million TEU (6.9 per cent of the global fleet) at the beginning of the year.

Alphaliner data records just four ships of 12,000 TEU and over currently without employment, in contrast to 12 in early January. In the 8,000-11,999 TEU sector the decrease has been even sharper, with just 15 idle, versus 55 anchored at lay-up in early March.

Demand for 4,300-5,300 TEU are in general for short-period hires. Although on paper, 32 more of these vessels are available for charter, Alphaliner notes that just seven are "spot", meaning that the other 25 units, currently in cold lay-up, would need up to two months for reactivation, depending on the dry-docking required.

Unsurprisingly, as a shortage of container tonnage is reported in some sizes, charter rates have soared. In the panamax sector, daily hire rates have leapt to around US$11,000 a day, from $8,000 a month ago and the sub-economic $4,000 per day or below seen earlier this year.
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