Earlier this week it was reported by The Wall Street Journal that Maersk “is in talks with China’s Jiangnan Shipyard for up to 10 small containerships,” each with capacity of around 2,200 containers.
As a result, it says the industry will struggle with overcapacity, and says delivery of more Ultra Large Container Ships in coming years “will exert significant downward pressure on the midsize segment,” ships with capacity of 3,000 TEU to 9,000 TEU. About two-thirds of those ships are owned by tonnage providers, companies that own ships and lease them to liner operators. Those owners “are expected to suffer the most from cascading pressure, as reemployment risk remains significant due to the growing overcapacity.”
DSF also said upcoming regulatory initiatives “further add to the uncertainties of running a liner business.”
These include both the requirement by the International Maritime Organization that ships reduce sulfur content in their engine exhaust by using low-sulfur fuel or exhaust gas scrubbers by January 2020 and the upcoming review by the European Commission on whether to extend the liner shipping consortia exemption past April 2020.
The IMO mandate is expected to increase fuel costs considerably, and DSF said, “Irrespective of which solution is chosen, we expect slow steaming to be a central element of fuel-compliance strategies, as past experience suggests that this is an efficient way of achieving lower fuel consumption and emissions rapidly, at the same time as reducing the overall effective fleet capacity.”