Executive Briefings

Money May Be Short Now, But Carriers Haven't Lost Appetite for Large Ships

Drewry's research shows that the average size of vessel deployed between Asia and North Europe now exceeds 10,000 TEUs for the first time. Orders for Ultra Large Container Vessels (ULCVs) have been quiet recently, but the pace of growth in vessel sizes will continue to outstrip cargo growth for the foreseeable future.

'K' Line's recent confirmation of an order for five 14,000-TEU vessels highlights two key issues. Firstly, that the ocean carrier drive for greater economies of scale is far from over, and secondly, that the recent devaluation of the Japanese yen has made the country's shipyards competitive again.

The ships are scheduled for delivery in 2015. Although their destination has yet to be defined, they will most probably join the CKYH alliance's other ULCVs operating between Asia and North Europe, where 38 vessels averaging 10,543 TEUs are already deployed in four weekly strings. Yang Ming will add another four 14,000-TEU vessels in 2015, and has an option for a further five.

The message is that no one should be under any illusion that the current lull in ULCV orders indicates that ocean carriers' appetite for bigger ships is over. They just don't have the necessary finances at present to speed up the process. Most ocean carriers lost money again last year, and the prospects for this year are not bright either.

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'K' Line's recent confirmation of an order for five 14,000-TEU vessels highlights two key issues. Firstly, that the ocean carrier drive for greater economies of scale is far from over, and secondly, that the recent devaluation of the Japanese yen has made the country's shipyards competitive again.

The ships are scheduled for delivery in 2015. Although their destination has yet to be defined, they will most probably join the CKYH alliance's other ULCVs operating between Asia and North Europe, where 38 vessels averaging 10,543 TEUs are already deployed in four weekly strings. Yang Ming will add another four 14,000-TEU vessels in 2015, and has an option for a further five.

The message is that no one should be under any illusion that the current lull in ULCV orders indicates that ocean carriers' appetite for bigger ships is over. They just don't have the necessary finances at present to speed up the process. Most ocean carriers lost money again last year, and the prospects for this year are not bright either.

Read Full Article