The idle fleet is arguably the fastest-growing part of the global containership fleet. What’s behind the doubling of the idle fleet in the past year?

According to a report from Drewry Maritime Research, the number of idle ships—ships not used for commercial operations—has increased from 238 vessels (with a capacity of 900,000 TEU) in November of last year to 435 ships (1.7 million TEU) in early November of this year.

Parked in various harbors around the world and awaiting operations, these ships currently account for about nine percent of the global containership fleet. At the beginning of last year, the idle fleet was just 2.5 percent. The recent surge happened at a particularly high rate in the second half of this year.

What has happened to cause this surge? There are several factors, according to the Drewry report.

One is the widening overcapacity in global container shipping sector and particularly the surplus capacity in old panamax ships (typically 4,000to 5,000 TEU) following the widening of the new Panama Canal locks in June. The capacity of idle ships of 3,000 to 5,000 TEU has doubled since last November; 89 ships of this size were idle as of early November 2016. This size of ships makes them too small for the main trades and they are increasingly seen as obsolete.

The idle fleet today would be larger than 1.7 million TEU if 600,000 TEU of ship capacity had not been scrapped during 2016.

Another factor behind the surge of idle ships is the bankruptcy of Hanjin at the end of August. Former Hanjin-operated fleet account for 623,000 TEU (or 36 percent) of the total idle fleet. Of this ex-Hanjin fleet (which includes old panamax vessels), 200,000 TEU is for containerships of more than 10,000 TEU from discontinued transpacific and Asia-Europe services.

As Hanjin was forced to pull ships from the east-west routes, the other carriers were able to increase the utilization of their existing vessels and did not add much replacement capacity. The Hanjin bankruptcy may have created an artificial jump in the idle fleet, until some former Hanjin-operated ships are transferred to operators.

Over 1.1 million TEU of the idle fleet (equivalent to 65 percent of the total) represent ships owned by non-operating owners. “This is not an accident,” says the Drewry report, “and tells us something about the current over-supplied market and who bears an increasing burden from overcapacity today. Operators, or charterers, tend to off-charter vessels first and keep their owned vessels active. Many ships which were previously chartered at relatively high rates are not chartered again and join the idle fleet.”

Over 60 percent of the idle capacity comes from ships which are less than 10 years old. Many of the old vessels have already been scrapped, not idled.

“The young age of the growing idle fleet is a strong indication of the current overcapacity,” the report concluded. “More non-operating owners will need to assess whether future demand for chartered tonnage justifies parking these idle assets (at an ongoing cost) or whether they should bite the bullet and scrap them.”