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Overcapacity fears from new ULCVs unfounded, says Alphaliner

THE renewed overcapacity fears in Asia-North Europe trade, sparked by the rumoured new orders for Ultra Large Container Vessels (ULCVs) of 22,000 TEU, seem to be unfounded.

According to Alphaliner's estimates, the newbuildings of 14,000-22,000 TEU that are to be introduced will only increase Asia-North Europe capacity by some 7 per cent in 2018, with 2019 growth expected to drop to 4 per cent.

"These numbers take into account the expected cascading of smaller tonnage into other trades, including on the Asia-Mediterranean corridor. Such growth levels, assuming carriers will retain the same number of strings on the trade, should be manageable as long as cargo demand remains robust," Alphaliner said.

Furthermore, average Asia-North Europe capacity in July and August 2017 is already up 7 per cent from a year ago, with vessel utilisation remaining at above the 90 per cent level, despite the influx of the new capacity, according to World Maritime News of Rotterdam.

One new peak-season service was already introduced by French liner CMA CGM in July, eight extra loaders have been mounted since June, as carriers continue their fight for market share.

However, the introduction of the new ULCVs is likely to create problems for owners when it comes to cascading of smaller 8,000-13,00 TEU ships to other trades, as they could struggle to find profitable employments for these vessels, Alphaliner pointed out.

Lack of ordering in the container shipping sector in place over the past two years, especially when it comes to megaships, has seen reports surface of potential orders from CMA CGM, and more recently MSC, for 22,000 TEU tonnage.

The two companies are said to be finalising their orders with Chinese and Korean shipbuilders, with the expected delivery of the sea giants set for late 2019 onwards. Nevertheless, the orders for what would become the world's largest container carriers by TEU capacity are still to be confirmed by the two liner majors.