Charter Owners Hit By Slack Demand For Small Ships

Non-operating owners of vessels that charter small feeder ships to shipping lines are getting hit hard by the waning of demand for these ships.
Container ships with capacities of less than 1,000 20-foot-equivalent units, which have been the mainstay for short-haul feeder and coastal trades, are increasingly being returned to their charter owners and replaced by larger, more fuel-efficient ships, according to Alphaliner.

Non-operating owners of vessels that charter small feeder ships to shipping lines are getting hit hard by the waning of demand for these ships.
Container ships with capacities of less than 1,000 20-foot-equivalent units, which have been the mainstay for short-haul feeder and coastal trades, are increasingly being returned to their charter owners and replaced by larger, more fuel-efficient ships, according to Alphaliner.
Of the 773 existing container ships with capacities from 500 to 999 TEUs, 58 vessels are unemployed, according to Alphaliner figures. This size range is the worst affected with an unemployment rate reaching 7.5 percent compared with an unemployment rate of 3.5 percent for all container ships with capacities of more than 1,000 TEUs.
Of the 58 unemployed ships below 1,000 TEUs, 54 are charter market ships, which have been replaced by larger ships, mostly in Europe.
The decline in demand for these ships has compounded the problems facing the German KG groups, which were the largest non-operating owners of ships of this size.
“The 100- to 200-TEU ships that were popular on regional and feeder services in the 1970s and 1980s belong to history,” Alphaliner said.
During the 1990s, the 200- to 300-TEU ships plying these services were progressively displaced by 500-TEU ships. During the past two or three years, the 500- to 600-TEU ships have progressively vanished from the charter market.
“It is now the turn of the 700- to 900-TEU ships to fall out of fashion,” the French shipping information service said.
These ships have comparatively higher operating costs per slot than the 1,000- to 1,200-TEU ships with which they now compete.
“The current weak demand in Europe does not help,” the French shipping news service said. “Several of these ships alternate short idling periods with employments for round trips of one or two weeks, either to fill gaps or to scoop up punctual extra volumes.”