Container tonnage market: crisis on march

Early 2009 didn't look very good for container tonnage owners and operators. For the last two months the number of idle container carriers increased 2.2 times up to total capacity of 800,000 TEU which accounts for 6.5% of the entire fleet's container capacity. This is twice as much as total capacity of unemployed ships in notorious March of 2002 (3.2%) and even larger than the 5% reached in 1986 when the whole fleet of U.S. Lines was frozen in the wake of bankruptcy. Such large-scale laying up of vessels is caused by continuing decrease of container services due to overcapacity in the current market against trivial lack of cargo.

 
Source: AXS Alphaliner
As of the beginning of February 2009, global fleet of container carriers comprised 4,740 vessels with total deadweight of 161.7 mln tonnes and total capacity of 12.2 mln TEU. As compared with 2005, the deadweight grew by 50.2 mln tonnes (or 45%), container capacity - by 20.3 mln TEU (or 49.3%). As per 01.02.09, global backlog of orders numbered 1,156 box ships with total deadweight of 70.4 mln tonnes, which accounts for 43.6% of the existing tonnage.

 
Total capacity of newly ordered container carriers amounts to 5.9 mln TEU (or 48.4% of the existing tonnage). Sips with capacity equal and more than 8,000 TEU make over 50% of newly ordered tonnage while 3,000 TEU vessels account for a little bit more than10% of the backlog of orders.

 
So, within several years, container deadweight will grow almost 1.5 times with one third of this tonnage to be delivered in 2009 hence the supply of container tonnage is to grow by 15% within the coming 12 months. On the other hand, JP Morgan analysts forecast the growth of demand for container transportation by only 2.6% in 2009 against earlier forecast at 7.6%.

 

According to a more optimistic opinion of BNP Paribas analysts, global container transportation will grow by 6% in 2009.

 
Apart from this, the 42-pct decrease of trade turnover between Russia and China in January 2009 is also quite illustrative as well (59% - export and 27% - import). The forecast of IHS Global Insight says container turnover of the largest US ports will fall by 11.8% in the first half of 2009. Turnover of Jakarta container terminal (Indonesia) is expected to fall by 30% in 2009.

 

Construction of 3.5-mln TEU container terminal in the port of Hamburg is postponed till 2015. January results of the majority of terminals in Ukraine, RF and Baltic states is also disappointing. The Black Sea leader of container business - Romanian portConstanta - has been demonstrating the decrease in container transshipment from the end of 2008. Actually, for a variety of reasons, it was not Constanta but Ukrainian ports to hold the leading position in terms of container throughput. The port of Odessa handled 21,785 TEU in January 2009, a 36.5-pct decrease, year-on-year. At the same time, the port's leading terminal - SC "HPC Ukraina" cut container handling by 40% to 19,200 TEU. Ukrtranscontainer terminal in the port of Iljichevsk decreased container throughput by 54.4% to 16,900 TEU.

 
Negative dynamics of container throughput was demonstrated by the Baltic ports as well. In January 2009, the port of Klaipeda handled 21,096 TEU (-27.5%, year-on-year). Due to certain reasons, the port of Kaliningrad decreased its container throughput by 3.4 times - to 3,480 TEU. Container throughput of First Container Terminal (St. Petersburg) totaled 63,307 TEU in January 2009, which is a 21.9-pct decrease, year-on-year. In the first month of 2009, turnover of Vladivostok Container Terminal amounted to 14,760 TEU (-3.1%, year-on-year). The increase was registered only in Novorossiysk - up 9.4% to 30,900 TEU mainly due to Novolesexport which raised its throughput by 67.6% (against low cargo flow in January 2008). So some analysts suggest speaking about minimal slowdown rather than maximal growth rates of container turnover. Many of leading carriers holding a stable position at container market are not willing to continue this non-profit operation especially after a fall of bunker fuel surcharges caused by oil price decline. That is why a number of large container carriers like Mediterranean Shipping Co., Emirates Shipping Line, CMA CGM, Mitsui O.S.K. Lines, Hapag-Lloyd announced revision of their basic rates for tariffs. As the Shipper's Council has a hostile opinion about such measures, the container world is to face quite stirring negotiations and changes, the Portnews information agency said.