NEWS

>> MDST's projections for 2017.more.

>> SM Line - its first months.more.

>> North American East Coast Port Expansion.more.

>> Japan-EU Trade Deal.more.

>> The Ocean Network Express.more.

>> The Qatar crisis: impact on container shipping services.more.

>> Maritime Professional Services Award.more.

>> Invest in rail freight to cut road congestion.more.

>> South Bradford Lorry Parking Study.more.

>> New Mega Alliances.more.

>> Businesses have their say on freight transport in the Marches.more.

>> Free trade zones at UK ports & airports.more.

>> Non alliance shipping lines.more.

>> New mega alliances.more.

>> Transpacific - port coverage from April 1st.more.

>> Are direct services becoming less attractive for shipping lines?. more.

>> What happens to the small ships post Panama Canal expansion?. more.

>> Maersk to acquire Hamburg-Sud and reinforce its presence on the Latin America routes. more.

>>£0.5 trillion of trade passes through UK ports. More.

>> The future of rail freight and private investment. More.

>> The Northern Freight and Logistics report. More. 

>> Oxford Cambridge Expressway Study. More.

>> The potential impact of Brexit on trade. More.

>> India - the impact of shipping lines’ consolidation and the cabotage rule change. More.

>> Iran – changes in maritime services post-sanctions. more.

>> 'India: The only way is up' say MDST in an article published by Lloyds List. More.

>> Hanjin’s collapse - A wake-up call to the industry? More.

>> Peak season 2016: could the seemingly more rational shipping lines restore stability to the market?. More.

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What happens to the small ships post Panama Canal expansion?

After a series of delays, on 26th June 2016, Panama inaugurated the expanded Canal where larger locks now allow the passage of vessels that can carry up to 14,000 TEU (vessel capacity before the improvement being a maximum 5,000TEU). This will enable shipping lines and shippers to benefit from economies of scale as well as improvements in transit times.

Focusing on the Far East - North America East Coast trade lane, we estimate that the number of services has declined from 33 in 2015Q4 to 27 in 2016Q4, with the vessels deployed on this trade lane down from 322 to 256 during the same period. Looking at the deployed capacity, we estimate that the decline in both number of services and in number of vessels has been accompanied by a decrease of circa 6% in the overall capacity deployed on this trade lane. The class of ships estimated to have experienced the biggest decline is, unsurprisingly, that of 3,000-4,999TEU, accounting for 49% of the overall capacity deployed on these routes in 2015Q4, down to 17% in 2016Q4.

The decline in the usage of these vessels in these routes does not come as a surprise. The fate of some of these vessels, on the other hand, remains unknown. From our Containership Databank, we estimate that during the fourth quarter of 2015, there were 144 vessels of 3,000-4,999TEU deployed on the Far East – North America East Coast trade lane, of which 23 have remained on the same route and 60 have been cascaded to other routes in 2016Q4. Of the remaining 61 vessels, we estimate that 15 have been scrapped while as many as 46 have been laid up, with the latter accounting for some 32% of the overall capacity deployed on these routes in 2015Q4.

How many of these vessels will be allocated to other routes, likely intra-regional markets, is not easy to predict. What seems likely to happen, however, is that the average age of the scrapped ships could reduce in the coming months. As shown in the following table, the average age of the 46 vessels is less than 10 years.

Table 1: Vessels of 3,000-4,999 TEU deployed on the FE-NAEC trade lane in 2015Q4

No. of ships

 Status in 2016Q4

TEU

Average age

15

Scrapped

10%

66,925

                      17.60

46

Laid Up

32%

209,056

                        9.95

60

Cascaded to new routes

42%

268,179

                      10.70

23

Same route

16%

105,198

                        8.68

144

 

100%

649,358

 

Source: MDS Transmodal Containership Databank, January 2017