New container ship orders hit a record high of 7.54 million TEU

Newly built container ship of Evergreen shipping line (Photo: Evergreen)

In the past 10 quarters, new container ship orders have reached a record high with 7.54 million TEUs contracted, equal to the level signed in the previous 30 quarters. Orders have increased for 10 consecutive quarters too with total volume reaching 7.54 million TEU, equivalent to 28.9% of the existing fleet.

“Despite the collapse in freight rates, shipowners still have an appetite for new container ship orders and the order book has continued to grow. The record high order book of 7.54 million TEU will result in significant changes to the container fleet in the coming years,” said Niels Rasmussen, Head of Shipping Analytics at BIMCO.

“The large order book will result in significant fleet growth. Scheduled deliveries for 2024 and the remainder of 2023 are currently at 5.03 million TEU. We estimate that recycling will hit nearly 1 million TEU during that period and the fleet could therefore soon exceed 30 million TEU for the first time; up 16% compared to today,” says Rasmussen.

The handover of ships will also increase the types of fuel used. 57% of the TEU capacity in the order involves ships prepared with alternative fuels to some extent compared with just 10% in the current fleet. The first ships using methanol will be delivered and the first ammonia-ready ships will be launched soon. Five different fuels can be used: high and low sulfur fuel oil, LNG, methanol and ammonia. As the use of alternative fuels increases, it will become increasingly difficult to establish a single appropriate benchmark for the time charter and property markets.

At the same time, fleet ownership by operators will continue to increase. Ten years ago, operators' ownership of fleet capacity bottomed out at 50% but has since increased to 61%. This ratio will increase further in the coming years as 65% of order capacity is controlled by operators. Many of the largest vessels by inactive owners are fixed on long-term charters and an increasing number of smaller vessels operate in the short-term charter market. Combined with increasing ownership rates, the ability of operators to use the time charter market to quickly adjust fleet capacity is diminishing.

"Most importantly, the new ships will be more fuel efficient than most of the existing ships and the introduction of alternative fuels will help reduce their greenhouse gas emissions," says Rasmussen.

Read more:

• No signal to cut capacity in the war on container freight rates
• Shipping lines will use many tools to cut supply - Former chairman of Evergreen and Yang Ming
• Excess capacity could cause a new price war among container lines, warns Evergreen chairman
   

Source: Phaata.com (According to Neils Rasmussen, BIMCO)

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