Boxship capacity deficiency to prevail until 2023

• While the global orderbook for new containerships stands at about 25% of the existing fleet in service, the majority of this capacity will not come into service until 2023 and thereafter

Long construction lead times for containership orders placed at the start of the newbuilding boom in 2020 should ensure the benefits, or otherwise, this additional capacity will not be felt until next year

According to Alphaliner, there will be insufficient new boxships coming into service this year to compensate for the capacity shortfalls caused by system inefficiencies it said were presently consuming about 10% of  ‘dynamic’ containership capacity.

“Since the uptick in orders only came in mid-2020, when the orderbook-to-fleet ratio was only 9%, newbuilding deliveries this year are forecast at ‘only’ around 1.10 million teu. This is roughly in line with the average in 2016-2021 when annual boxship deliveries oscillated around the 1 million teu mark,” said Alphaliner.

But while the lion’s share of boxships contracted in the recent boom of post-2020 will not enter service until 2023 and 2024, both years will see historic record deliveries of around 2.4 million teu, or around 9% of fleet growth per year.

“Carriers and non-operating owners made 2021 a bumper year for container vessel orders and contracting activity continued through the first two months of 2022,” said the analyst.

As of February, the global orderbook-to-fleet ratio stood at about 25%, which is considerably less than the 65% seen in the previous ordering boom of between 2006 and 2008. However, present numbers relate to a baseline fleet that has more than doubled in size since 2008.

Meanwhile, there is some evidence to suggest that shipyards are bringing forward delivery schedules of existing orders. 

“Incentivised by strong demand, a number of yards have accelerated ship deliveries wherever possible. In many cases, this allowed the builders to negotiate premiums with owners who may benefit from an early delivery,” said Alphaliner.

“At the same time, accelerating the pipeline has allowed yards to market additional newbuilding slots that have opened up. A slowdown in demand could similarly push owners to defer some tonnage delivery until 2025.”

Escalating newbuilding costs, which have risen 20% in the past two years, are so far yet to put off buyers.

Declines in the value of the Chinese yuan and Korean won against the dollar helped to incentivise owners to place orders last year, while container line operators’ recent enormous profit margins have convinced them to modernise their fleets, with more efficient ships equipped with higher specifications than would have been ordered in the past.

More than half of all capacity on order is provided by neo-panamax units of 12,000 teu-16,000 teu capacity under construction for both container line operators and non-operating owned tonnage provided by the likes of Eastern Pacific Shipping, Shoei Kisen and others.

Neo-panamax has become the go-to class of vessel for mainline container carriers, according to Alphaliner. It points out that every single top-12 carrier currently has ships of this class on order, either through outright ownership, charter, or both. At 3.47 million teu, neo-panamax ships account for 55.7% of the global 6.22 million teu orderbook.

Ships of this size are no longer limited to the east-west mainlines, but have found their way into numerous second-tier services to India, West Africa, and the east and west coasts of South America.

Many of these ships are expected to take the place of ageing 8,000 teu class units built in the early 2000s that will phase out of service at about 20 years of age, once the market has “normalised” said Alphaliner.

Meanwhile, interest in trade-flexible ships of 5,500 teu-7,000 teu appears to be on the increase, with ordering of this size range starting to take off last year. As a consequence, deliveries of mid-sized ships will remain low in 2022 and the first half of 2023.

Most recent containerships orders placed so far this year have been of this vessel type.

Interestingly, orders for so-called megamax boxships have taken a downturn, with no orders for ships with more than 18,000 teu capacity having been placed this year.

“Only a limited number of megamax ships will join the global container line fleet in 2022, with the only carriers to receive this kind of tonnage being Evergreen and MSC,” said Alphaliner. “In 2023, however, the picture becomes more colourful with ONE, Hapag-Lloyd, and OOCL among the recipients of megamaxes.” 

Container line operators receiving megamax units in 2024 include Hapag-Lloyd and OOCL, while deliveries will dry up due to the lack of recent ordering of this vessel class. However, Cosco is understood to be in the market for a further series of 24,000 teu units, which would then replenish the megamax pipeline well into 2025.

Minimal containership fleet growth could be helpful this year, given that economic growth forecasts for 2022 are being revised downwards due to inflation concerns, China’s overheated real estate sector and the Ukraine crisis.

The United Nations Conference on Trade and Development has said it is likely that global trade trends will reflect macroeconomic trends, “with lower than expected trade growth — efforts to shorten supply chains and to diversify suppliers could affect global trade patterns” this year.