Q4 2022
In 2021, the available capacity for most of the year was lower than in 2019 due to the capacity being stuck in congestion.
So, as congestion eases, the available capacity is now rising in 2022. Compared to October 2019, the available capacity is up by 6.2%, whereas in October 2021, it was down by 4.0% from October 2019.
The nominal and available fleets are set to increase as the huge amount of new tonnage ordered since Q4 2020 is delivered at an increasing pace through 2023 and 2024.
Xeneta expects 1.7m TEU to be delivered in 2023 and 2.5m more in 2024, levels which also reflect Xeneta's expectations for slippage (delaying a delivery) and cancellations.
The record for new containership deliveries was in 2015, when 1.67m TEU was delivered. This record will be threatened in 2023, depending on where slippage and cancellations land.
But 2024 is set to make a new record, which will hold for many years.
With this huge increase in capacity and the outlook of falling demand and low rates, demolition will pick up from its current lackluster state. Two more ships were demolished in October and November.
This brought the grand total of ships demolished in the first eleven months of 2022 to 4, totaling 3 020 TEU. In total, during 2021 and 2022, as little as 15 000 TEU has been demolished, less than a tenth of what left the market in 2020 (187 500 TEU).
In 2023 we expect demolition to increase to 400 000 TEU, a level last seen in 2017. Driven by deteriorating market conditions, held back from its full potential due to many demolition candidates being out on charter.
Looking into the next two years, we have set up three scenarios for the development of the available fleet. This is considering new deliveries, expected demolition activity, congestion and fleet efficiency.
Scenario 1: Return to the pre-pandemic
Congestion eases gradually as we return to the pre-pandemic norm of 3% with no effect from new environmental regulations.
Scenario 2: Easing congestion and lower fleet efficiency
Congestion eases slightly, but as congestion eases, the impact of new environmental regulation hits the efficiency of the fleet, with the two factors combined removing the equivalent of 7.5% of the nominal fleet from the available fleet.
Scenario 3: Congestion and regulation remove a large share of the fleet
Congestion stays where it is today, but the new regulation has a larger and faster impact than in scenario 2, increasing the share of the 'unavailable' fleet to 12.5% from the start of 2023.
Even in the "worst situation" in Scenario 3, the available fleet will grow after the initial bump from new regulations.
While growth will be lower than in return to the pre-pandemic scenario, it will still be higher than expected demand growth.
This suggests that overcapacity will put a tight limit on carriers' revenue in 2023 and 2024.
One reaction from carriers will likely be to idle more ships. We have already seen the idle fleet increase as rates collapsed and carriers have blanked sailings.
But, most idle ships can be quickly reactivated, unlike ships stuck in congestion.
Therefore, these ships will be considered part of the available fleet, regardless of whether or not carriers choose to deploy them for commercial reasons.
Check out the final webinar of 2022 to find out what we can learn from this year to strengthen our market position and prepare for what 2023 has in store?
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