The Post-Hanjin Era: Freight Rate Truce Is Over
It has taken a whole year for all of the idle ships of South Korean defunct shipping company Hanjin Shipping to be fully removed from the idle fleet following the company’s demise, according to Alphaliner.
The former South Korean shipping giant was officially declared bankrupt by the Seoul Central District Court on February 17, less than six months after it first filed for court receivership.
Hanjin’s departure from the liner trades in September last year brought the idle fleet to 1.6 million TEU, as 0.6 million TEU was added from Hanjin’s ex-tonnage.
As explained by Alphaliner, the majority of these ships were pulled from the idle fleet in April this year when the new East-West Alliance services resulted in a surge in vessel demand.
Six of Hanjin’s former ships were sent to scrapyards, while the others were taken over by other carriers, leaving only one ship from the fleet idle-the 1,647 TEU Orion, owned by Alpha Ship.
“However, the capacity discipline and rate stability that followed Hanjin’s departure have also been eroded as the container shipping market steps into the post-Hanjin era,” Alphaliner said.
Since September 2016, over 1 million TEU has been added to the active fleet amid ramping up of deliveries of ULCVs. Hence, the fleet currently stands at 20.44 million TEU, up by 5.7 percent year-on-year.
Alphaliner believes that the onset of the slack winter season from October will put further pressure on freight rates.
“The rate truce that carriers have largely abided by since Hanjin’s sudden exit one year ago, now appears to be crumbling. Rate slashing just ahead of the October holidays in China points to further rate instability as carriers continue to jostle for market share,” Alphaliner pointed out.
“The Shanghai Containerised Freight Index (SCFI) has recorded six consecutive weeks of declines and, despite strong peak season demand, carriers in August and early September failed to push rate increases through. This is a clear sign that rate cutting is starting to take hold once again.”
A new rate war is being predicted as carriers post black figures for the second quarter of this year heralding fairer winds when compared to the horrendous second quarter of 2016.
Ten carriers posted black figures in the second quarter of 2017, while only two reported losses for the quarter, those being Hyundai Merchant Marine (HMM), which booked a loss of USD 81.8 million, and Mitsui O.S.K Lines (MOL), which recorded a loss of USD 55.1 million.