Overcapacity in box sector in doubt

Malcolm Latarche
Malcolm Latarche
ShipInsight

05 September 2017


For the last few years, all the talk in the boxship sector has been about the need for mergers and acquisitions to resolve the overcapacity. But as ShipInsight has repeatedly pointed out, overcapacity is about ship numbers and not operator numbers. That point of view, which is shared by a number of analysts, has been shown to be true as Drewry has just advised that the newly established Korean operator SM Line has managed to amass a fleet of secondhand ships that sees it on the fringe of becoming on of the top 20 owners of boxships in the world. Most of the ships were ex-Hanjin vessels and SM has also been astute enough to acquire some of the terminal assets of Hanjin as well as its ships. It is nowhere near the size of the giants but with 18 ships of its own and a further six on timecharter, SM Line now has a fleet capacity of over 100,000teu and is planning to extend that further aiming to have a 30-ship fleet before the year ends. Commenting on SM’s growth Drewry said “The abundance of cheap ships on the market means that there are still opportunities for ambitious newcomers to force their way in.” With access to sufficient funds, which will likely come from non-conventional sources, there is every chance that in less than a year’s time the overcapacity that seemed to have been solved with Hanjin’s demise could return. There are plenty of new boxships on order to satisfy shipyards hungry for work, but the more older vessels that are still operating then the less need there is for anymore