Reduced appetite for ultra large ships will benefit shipping industry — Drewry 

Reduced appetite for ultra large ships will benefit shipping industry — Drewry 
PHOTO CREDIT: Financial Times

Shipping consultancy firm, Drewry on Tuesday said the industry’s supply-demand balance will benefit from a reduced appetite for ultra large container vessels (ULCVs) among the major carriers.

Drewry’s Senior Manager, Container Research, Simon Heaney, in a statement said aside feeder ship replenishment, there has been no reaction from other lines to HMM’s mega-ship order, “and as such we have greatly reduced our projected new orders for 2020 onwards”. 

“This subsequently feeds into a much brighter supply-demand index forecast for carriers through 2022, although the index is still expected to remain below the important 100 marker, indicative of a tighter but still over-supplied market.

Heaney further said that these adjustments on the supply side would be sufficient “to cushion the blow from slowing demand growth” and would contribute to better freight rates and profits.

Weaker global macro-economic drivers contributed to a downgrade to Drewry’s port throughput forecast for 2019 to around 4%, but that softening trend should be mitigated by changes made on the supply side to better balance the market.

Adjustments to the containership orderbook reveal that deliveries have been spread more widely than before with more original 2018-19 newbuilds being pushed out to 2020. Combined with an expected increase in demolitions the net addition to the fleet is expected to be only half that of 2018, leading to a fleet growth rate of just 2.5%.

“Last year was one of the most unpredictable the container shipping industry has faced, and this year is likely to be similarly volatile with question marks still hanging over the US-China trade war and new fuel regulations. However, despite being dogged by uncertainty, Drewry is predicting another solid year for the market,” Heaney said.