IMDO: Overcapacity Still Causes Fleet Idleness

ILLUSTRATION
According to the Review, Handymax’s saw the greatest degree of inactivity with 107,428 teu idle, followed by the Panamax segment, which had 83,624 teu of inactive capacity.
Analysts Alphaliner expect further declines of idle vessel capacity over the coming weeks as ships either find employment or a finally scrapped.
Whilst the idle fleet is currently low, the CEO of A.P. Møller Maersk has said he doesnt expect a sustainable recovery in the short term.
There is lingering overcapacity, so there will be pressure in the market in 2015, 2016 and probably 2017, commented Nils Andersen.
The P3 Alliance of which Maersk is the largest member, is due to begin operations in the autumn and Maersk expects cost savings of $1 billion annually from the new networks efficiencies. Mr Andersen commented that once P3 begins he expects smaller competitors to either merge or join other alliances, which could eventually lead to more balance in supply and demand.
When speaking about the tanker market, both clean and dirty segments suffer from overcapacity, based on IMDOs report.
The global tanker market is experiencing low rates, with the crude sector really suffering with most routes providing very low earnings for owners, according to SeaTrade Global. VLCC trades out of the Gulf last week were earning just $6,000/day.
Suezmaxes also experienced paltry rates with only Med-Med voyages topping $10,000/day.
Aframaxes fared better, realising rates of around $20,000/day for the Gulf/East and Caribs/US Gulf routes but overall the crude sector has too many vessels and charterers are keeping ship-owners nervous by late disclosure of cargoes.
The product sectors are faring somewhat better; however weak market conditions and high levels of new tonnage are pressurising owners. A large part due to falling US gasoline imports as it benefits from its domestic energy boom.
The LR Atlantic market, which performed very strongly last year with earnings from $15,000 -$20,000 on average is now struggling below $10,000 a day.
The MR market is forecast to improve in the short run as single hulled vessels are phased out and some older tankers are retired, however a large new-delivery schedule will quickly lead to overcapacity.

IMDO, May 29, 2014; Image: GMA