2014 will usher in a record year of ship deliveries for worldwide trade, according to ocean liner analyst Alphaliner.
Capacity topping 1.6 million TEU’s (twenty-foot equivalent units) will join the trade this year with 17 of the top 20 carriers adding vessels to their fleets.
Vessel size is increasing in anticipation of the Panama Canal expansion scheduled to be completed in 2015. This building trend is expected to continue for another two years.
In the short-term, vessel space will be tight through Chinese New Year (Jan 31-Feb 6), while carriers withdraw sailings to take advantage of the factory shutdown period for maintenance and inspection of those vessels. Others have announced a “void” schedule through the first couple months of 2014, where they systematically take certain vessels out of rotation for the same purposes. This will have a downward effect on capacity–already tight from winter deployment schedules (when entire vessel strings are cancelled during the slower winter months).
The reserve fleet at anchor off Singapore will continue to grow as the newer and larger vessels delivered during the year send smaller vessels into storage. Summer deployment will bring vessel strings out again by March or April, as they gear up for the higher volume months. This will cause capacity to swell, possibly to new records.
Capacity has an inverse connection with rates. Carriers have timed their January 15 rate increase announcement ($300 per 40′) to coincide with what may be the tightest space situation of the year–the weeks surrounding the Chinese New Year. Following that, as capacity grows, rates are expected to erode to softer market for the traditional May 1 contract renewal season. 2014, therefore, should be very similar to 2013 in terms of rate cycles.
Rich Roche is Vice President, International Transportation for Mohawk Global Logistics.