London, UK – Ocean carriers have this year shown themselves to be “well-skilled” in the art of capacity management, according to a Drewry report.
The report attributes carriers’ success in lifting rates to their ability to juggle supply-demand peaks and troughs.
Drewry’s Global Freight Rate Index was 37% higher in the first five months of this year than in the same period of 2016, despite container shipping’s well-known oversupply fundamentals.
The research consultant has identified what it terms the carriers’ “five-part trick”, which they have deployed to combat the impact of too much tonnage across global container trades.
Aggressive scrapping of older, less economic vessels, along with the mothballing of other ships which become temporarily surplus to requirements, are two important pillars of the carrier strategy, along with the deferring of newbuild deliveries for as long as possible.
But it is the final two parts of the carrier strategy that Drewry suggests are the toughest to implement successfully: cascading ships into smaller trades and blanking sailings based on the anticipated tradelane slot requirements.
However, according to the recent Drewry analysis of headhaul ship utilization, carriers have focused their attention on boosting east-west trade utilization at the expense of north-south routes.
In its quarterly Container Forecaster report, Drewry load factors recorded for east-west headhaul voyages were the “best ever” said Drewry. But, in contrast, the north-south reading for Q1 was the “worst of its kind on record”.
In the report, Drewry lauds the carriers for their expertise in anticipating the monthly supply needs of a tradelane, which it says is “an extremely complex task” and made more difficult by the “lumpy nature of volumes”.
However, Drewry cautions, the capacity “juggling act” will get tougher with the millions of teu of newbuild capacity due to hit the water over the next few years