”The most dramatic symbol of these problems is that an 18,000 container Triple-E freighter, one of the largest (and therefore theoretically most cost-efficient) container ships on the planet, was idled by Maersk in late October.” — Fortune
Global trade has underperformed. But there are also just too many ships. … Even before demand took the wind out of their sails, the freight industry was creating some problems for itself. Prior to the recent cratering of crude prices, shipping lines like Maersk were aggressively building and ordering more and more ultra-large container vessels – huge, efficient megaships that lowered the cost of each container transported.
But as the megaships came online, capacity ballooned, triggering a rate war between shipping lines. That left the overall market more vulnerable when a demand dip in China and Europe brewed up a perfect storm. In just one three-week period in August, container rates on routes between Asia and Europe dropped by nearly 60 percent year over year. In some cases, market rates have dipped below fuel costs.
This year, the idling of ships has surged to historic levels across the shipping industry. … More megaships are scheduled to come online over the next two years, and unless global trade stages a massive turnaround, shippers will continue to race to the bottom.