International Maritime
Both the Red Sea diversions and slower sailing speeds have allowed carriers to address excess capacity issues and a large order book that represents almost 25 % of the current fleet at 7 million TEUs .
“ Will the market be able to absorb that capacity ? The jury is out on how much of a problem it will be , but it might not be as big as you think ,” Tiedemann told TPM24 , outlining several factors he said would allow carriers to lessen the impact of the incoming tonnage .
No major ship orders were expected in the next three years , and the orderbook stretches out further than it has ever done with ships being delivered in 2028 and 2029 . That means some of the 7 million TEUs of capacity on order will be delivered late .
Another issue that would address excess capacity is the fleet age , with younger ships being sent for scrapping . Vessels ordered 15 years ago were designed to sail faster but had bigger and thirstier engines that are no longer suitable , Tiedemann noted .
Sailing ships more slowly to comply with regulations and lower fuel consumption would absorb capacity .
“ Even a small reduction in speed will create additional demand for tonnage , and decarbonization will need new ships ,” he said . “ We believe that the order book is admittedly huge , but it might be manageable on the condition that the market remains stable .”
email : greg . knowler @ spglobal . com
Left to right : Jan Tiedemann , Alexia Dogani , Jeremy Nixon , Casper Ellerbaek and Mark Szakonyi . Caught in the Moment Photography and feeder carriers used in transshipping to provide the required efficiency would be difficult .
“ You have to rely on your terminal infrastructure to be operating at a consistently high level of productivity to be able to service shuttles ,” she told TPM24 . “ Maersk is good at it , Hapag-Lloyd will be relying on Maersk to drive it .
“ I ’ m not saying they can ’ t do it , but there will be a period of operational change ,” McRoberts added . “ People don ’ t like transshipment . They like direct services .”
Jan Tiedemann , senior analyst at Alphaliner , said that Gemini “ looks pretty good on paper ,” but implementing the model would be a challenge .
“ The network relies on a lot of broken connections , meaning reducing the numbers of port calls ,” he said . “ If you ’ re not directly on one of the main routes between hubs , your cargo will have to transship , probably to a higher degree than current networks , and the question is how well that will work .
“ Nobody has tried this kind of network on such a scale , and one of the differences to the other networks is that Gemini intends to deploy feeders under the alliance control , which so far is unusual ,” Tiedemann added . “ We will have to wait until next year to see if it works as well as they imagined . I think it might , but there are risks as well .”
‘ Not that ambitious ’
Lars Jensen , CEO of Vespucci Maritime and a Journal of Commerce analyst , said much of the skepticism over transshipment was a result of the last few years of supply chain disruption .
“ A lot of people are concerned that transshipment and reliability will be awful , but I think people have become jaded over the last three and a half years when reliability has been absolutely abysmal , and the ability to get transshipment to work has
www . joc . com also been abysmal ,” Jensen told TPM24 . “ But the last three and a half years are not the norm .”
Jensen also noted that the goal by Maersk and Hapag- Lloyd to deliver 90 % schedule reliability was “ not that ambitious .”
“ In 2019 , the 2M Alliance on Asia – North Europe was operating at 85 % to 90 % on time , and on Asia – Mediterranean they had five consecutive months above 98 %, so do I believe they can execute this operationally ? Yes , I absolutely believe they can ,” he said .
“ Will the market be able to absorb that capacity ? The jury is out .”
“ The one open question is whether customers are willing to pay the same freight rates for transshipment ,” he added .
Alan Murphy , CEO of Sea-Intelligence Maritime Analysis , said Gemini ’ s goal is to actively improve scheduling , rather than padding scheduled transit times , but he wondered whether they were “ overpromising .”
“ It remains to be seen if they can achieve 90 % consistently through operational improvements alone ,” Murphy told TPM24 . “ The easiest solution is to consider how you schedule and it might mean Gemini says its transit time from Shanghai to Los Angeles is going to be 40 days at 100 % reliability . I hope that ’ s not their plan , and it is rather to improve the reliability through better on-time performance .”
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March 25 , 2024 | Journal of Commerce 25