The imminent suspension of a number of Asia to US East Coast and Asia to South America services is expected to further dampen demand for panamax tonnage, with many such vessels expected to become surplus to requirements, in the coming months. Since there is only an insufficient number of alternative routes suited absorb these ships, prospects for the panamax sector will remain dim for the time being.
On top of this, the sector already faces the imminent challenge of the opening of the new Panama Canal locks. As of 2016, container vessels of 8,000 â€“ 13,000 teu will likely begin to replace many of the 238 panamax units of 4,000 -5,100 teu (out of a total of 636 panamaxes) which, according to Alphaliner records, are currently deployed on services transiting the Panama Canal.
In the meantime, ten panamax units of 4,200-5,000 teu are to become redundant after the decision by PIL, K Line, HMM and Yang Ming to suspend their joint FE-East Coast South America service (See last two issues). A further ten panamaxes of 4,200-4,800 teu will be freed up by the seasonal merger of the G6 carriersâ€™ SCE and NYE services, to be implemented later this month.
Weak slack season demand could see another two or three FE to USEC allwater strings withdrawn, which would free up an additional 20 to 30 panamax ships. The total number of idle panamaxes of 4,000-5,100 teu could thus reach 40 to 50 units by January 2016, with charter rates forecast to plunge as a result of the widening supply-demand gap. This may, however, trigger a spate of opportunistic charterers at the expense of smaller tonnage, with negative effects on the charter market for smaller vessels.