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ULCV grip on Asia-Europe trades increasing

Ultra-large container vessels (ULCV) loading at least 18,000 TEU are set to play a dominant role in the Asia/Europe/Asia trade within the next two years
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 According to Copenhagen-based SeaIntelligence’s latest research, ULCVs will account for 43% of all capacity deployed on the route by the end of 2017 and about 61% by the close of 2018, This compares with a share of 35% (58 ships) currently and the forecast is based on this sector’s slot capacity rising by 5% per annum.

This is highly likely given that SeaIntel identified 47 ULCVs as being earmarked for delivery over this period of time. Since 2013 when Maersk Line took delivery of its first Triple-E containership, a relentless build-up in this class of vessel has occurred on the trade.

Alan Murphy, CEO of SeaIntel, attributed this to “such ships as offering ocean carriers the best scale economics on long trades with large cargo volumes”.

But he warned that it was not all good news and that ULCVs presented liner companies with huge challenges. “Firstly, they can serve as a dampener on future freight rate levels as prices are significantly influenced by the low slot costs offered by ULCVs.

“Second, the ships increase the load on ports and terminals as ULCVs lead to massive bursts in the number of containers that have to be handled at once. This can pose a major challenge to ports and terminals and downstream on the hinterland.

"Third, assuming that the Asia-North Europe trade lane can only absorb an additional 5% capacity per year, the new mega-vessels being delivered will push out vessels currently in deployment and as these vessels are too young to be considered for scrapping, they will have to be cascaded to other trades.”

The research suggests that overcapacity in the Asia-Europe trade is likely continue for some time yet and that the “wash from these ships” will affect markets elsewhere, too.

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