Megamax shortage ‘could hinder The Alliance’s competitiveness’

10/5/2017

Container shipping consortium The Alliance is falling behind on orders of ‘Megamax’ vessels as its member lines fight indebtedness or concentrate on internal reorganisation. The result, according to Paris-based research firm Alphaliner, could be a decline in cost-competitiveness on key East-West trades.

The analyst said large ship orders by rival alliances last month in the shape of CMA CGM’s and MSC’s newbuilding orders for, respectively, nine and 11 Ultra Large Container Ships of 22,000 TEU capacity, further piled the pressure on members of The Alliance, which were falling behind in the megamax vessel stakes.

“The five members of The Alliance − K Line, MOL, NYK, Hapag-Lloyd and Yang Ming − will have a total of only twelve ships of 18,000-22,000 teu, compared to 62 such units for the 2M (Maersk and MSC) and 51 units for the Ocean Alliance (CMA CGM, Cosco, Evergreen and OOCL), when all of the current orders for ‘Megamax’ ships are delivered by March 2020,” said the analyst.

But despite The Alliance’s deficit in large container ships, member lines are unlikely to place new orders for new Megamax vessels due to their cash-strapped status and their focus on internal reorganisation, according to Alphaliner.

“Both Hapag-Lloyd and Yang Ming are seeking fresh capital injections from their respective shareholders in order to reduce indebtedness, while the three Japanese carriers are preoccupied with the planned consolidation of their container shipping services on 1 April 2018 under the new ‘ONE’ banner,” it said in its latest weekly report.

“Hence, they are not expected to further expand their fleets in the near term.”

The upshot for The Alliance could be limited future growth on the Far East-North Europe trade where Megamax ships are slated to be deployed and where its members’ lack of large vessels could stymie competitiveness; Maersk claims the cost advantage of a 20,000 teu ‘Megamax’ vessel over older 14,000 teu ships could be as large as $500 per teu.