Panama Canal expansion spells trouble for Panamax ships

Panama Canal expansion spells trouble for Panamax ships

Bruce Barnard, Special Correspondent | Jul 12, 2016

Sights such as this one, a Panamax ship transiting the old Panama Canal locks, are set to become increasingly rare as container lines upsize tonnage to take advantage of better economies of scale made possible by the canal's addition of newer larger locks.

The recent opening of the expanded Panama Canal is shaking up the deployment pattern of container ships with rising numbers of classic Panamax vessels heading for lay-up sites or scrap yards, according to Alphaliner.

“Large container ships of 5,300 to 7,500 TEUs (20-foot-equivalent units) and very large container ships of 7,500 TEUs to 10,000 TEUs have started to increasingly replace classic Panamaxes of 4,000 TEUs to 5,100 TEUs,” the industry analyst said.

The shift is reflected in Alphaliner’s latest survey of idle vessels, with the number of jobless ships of more than 5,300 TEUs falling to a nine-month low of 51 as of June 27, with some of the unemployed vessels likely to return to service over the next two months.

There are at least 23 Panamax ships anchored in Southeast Asian lay-up sites in Labuan, Davao and Batum and “with grim immediate prospects, more ships of this class will join the lay-up pool.”

Twenty-two 4,000-TEU to 4,800-TEU ships, including some as young as 14 years, have already been sold for scrap this year. The impact of the exit of these ships from the global container fleet on capacity is expected to be muted as container lines replace them with larger ships.

Classic Panamaxes are still finding work — South Korean carrier Hyundai Merchant Marine is deploying some of its surplus 4,600 TEUs to 4,700 TEUs vessels on a new Far East-Middle East service — “but pressure on this market segment remains relentless,” Alphaliner said.

Alphaliner has forecast that the fleet of displaced classic Panamax ships could reach 100 units as they terminate their final service rotations this summer.

“Such a massive displacement of a whole class of ships has never happened in container ship history,” with Panamaxes facing a similar fate to that of general cargo vessels that were displaced from the east-west trades in the early 1970’s by the arrival of container ships.

http://www.joc.com/maritime-news/ships-shipbuilding/panama-canal-expansion-spells-trouble-panamax-ships_20160712.html

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