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Could MSC, CMA CGM orders push box ship industry over the edge?

Mon 04 Sep 2017 by Rebecca Moore

Could MSC, CMA CGM orders push box ship industry over the edge?

The box ship industry is recovering – but fears have been sparked that the mega boxship order book is a ‘mega-problem’

Concerns are growing that the recovery seen in the box ship sector could be derailed by the mega ship order book.

MSC is reported to be finalising an order for 11 ships of 22,000 TEU, which comes on the back of claims that CMA CGM is also planning to order nine 22,000 TEU ships. This has sparked fears of overcapacity in the Asia-Europe trade.

Alphaliner said if the orders are finalised, they would be delivered from late 2019 onwards (pending official confirmation). They would add to the 105 ultra large boxships that would be live on the Asia-Europe trade that year. Alphaliner said that this total includes 59 ships already in service and 46 units currently on order.

Global benchmarking platform Xeneta has expressed concern about the orderbook. Xeneta chief executive Patrik Berglund said that although the company remained positive about the rest of 2017, the increase in mega-ship capacity was a concern. Their riskiness to freight rates is made clear as according to Xeneta, 18,000 TEU ships need to command utilisation rates of at least 91% to achieve cost savings.

Mr Berglund said “Each of the key alliance partners is playing catch up with one another, trying to reap the mega-ship benefits. In doing so they’re going to flood the market with new capacity and risk reversing current positive trends. This is a potential mega-problem in waiting.”