Cascade pain awaits for ‘old’ panamax and post-panamax boxships

A wave of deliveries of containerships larger than 18,000 teu set to make life difficult for a smaller generation of vessels

Classic panamaxes and traditional post-panamax containerships will bear the brunt of the impact of a pending influx of larger vessels onto the Asia-Europe trades due to a lack of redeployment options, a new study shows.

Smaller intermediate sizes will suffer as larger vessels are cascaded out of the Asia-Europe trade with the anticipated delivery of around 50 ships of 18,000 teu or above this year, according to Maritime Strategies International (MSI).

With the expanded Panama Canal able to take vessels up to 13,500 teu, the former post-panamax designs of 5,200 teu to 7,600 teu will find the going tough as they are unable to benefit from other trading opportunities.

That will result in a record volume of deletions in this and the traditional panamax boxships sector, according to the study.

Of around 2.5 million teu on the Asia-to-northern Europe trades, MSI says only around 1.5 million teu is “displaceable” tonnage that can be deployed on other trades.

Cascading is likely to gather pace, with around 500,000 teu of ultra large containerships  scheduled for delivery by the end of this year and a similar amount in 2018 to 2019. In total, one-third of the tonnage on Asia-Europe services in theory could be placed onto other trades.

MSI container analyst Daniel Richards argues that this “has the potential to reshape deployment patterns across the industry”.

“Cascading is about to receive a significant boost,” he said.

There remains around one million teu of “old” post-panamax tonnage on mainlane trades. He says these 5,200-teu to 7,600-teu ships remain especially vulnerable to displacement due to the cascading of larger vessels.

The problem they face is that non-mainlane East-West services, where they might normally be redeployed, already use ships of between 8,000 teu and 10,000 teu. This includes trades from Asia to India and the Middle East.

MSI says the potential for redeploying these vessels into the intra-regional trade in Asia — the world's largest container trades by volume — is also limited.

While there is room for upsizing and the increased use of fully cellular vessels on intra-Asia trades, a number of obstacles remain.

These include port terminal infrastructure in places such as Bangkok and Hai Phong, which limits the size of vessel to around 2,000 teu.

In addition, the use of larger ships means spending more time in port, which disrupts sailing schedules. Some operators prefer the flexibility of smaller vessels.

That explains the predominance of ships below 1,300 teu in the regional cabotage trades and under 2,900 teu for the intra-Asia trades.

The“old” panamax designs, which MSI says will feel the most pain, are mostly deployed in the mainlane trades of the transpacific and transatlantic.

Classic panamaxes and larger boxships play a meaningful role in only two trades in Asia.

One is between north-east Asia and Southeast Asia, where long distances and large volumes are a spur to upsizing.

The other is the Chinese domestic trades, where China Cosco Shipping Corp has deployed a fleet of 40 “classic” panamaxes and a handful of post-panamax ships.

But MSI says a striking portion of the intra-Asian trade is still carried on vessels below 3,900 teu.

That makes traditional panamax and post-panamax designs key candidates for displacement or scrapping.

MSI forecasts a rise in “old” post-panamax demolitions to 240,000 teu this year compared with 160,000 teu last year.