It has been noted by analysts since mid-2016 that the order book has grown to all-time highs. In its number of the week, BIMCO highlights the latest milestone for the container industry. They estimate that the containership order book now exceeds 6.5 million TEUs for the first time in 15 years.
It’s been just 18 months since the containership order book was filled with six million TEU worth of new contracts, noting Niels Rasmussen, BIMCO Chief Shipping Analyst. Moreover, for the first time since 2014, the order book represents 26 per cent of fleet size.
Shippers expanded capacity in 2017 by focusing on the ultra-large segment of containerships. There are major shipping companies such as MSC, ONE, and Evergreen that are planning to construct containerships that will surpass 24,000 TEU capacity, thus making them the largest to ever be built. Several other companies, including Maersk, have also chosen the 15,000 to 16,000 TEU size as their preferred size. In recent years, carriers have begun to utilize smaller feeder vessels when they focused their attention on hub-and-spoke networks and smaller, niche markets.
In October 2020, the order book amounted to only 2 million TEU. In the period from 2022 to 2024, 6.2 million TEUs are projected to be delivered.
There are most likely to be containerships built until 2025 based on reports from many of the world’s leading shipyards. However, carriers continue to place orders as they plan for anticipated changes in the market and a need for more efficient tonnage.
Additionally, Rasmussen posits, congestion problems around the world will begin to ease over time along with the new building deliveries. “This could release as much as two million TEU effective supply on top of newbuilding deliveries.” As a result, he believes that the number of TEUs added to the fleet in just three years could exceed 8 million.
BIMCO points out however that the expected impact of the pending environmental regulations on the current containership fleet balances some of the dramatic capacity increases. It has been concluded that some of the older vessels will be unable to comply with the requirements, and owners will be forced to dispose of them. Some vessels might need to be reworked to meet the EEXI targets, or the steam may have to be slowed down.
Many boat owners have already developed their plans. However, accurately estimating the impact of EEXI, CII, and ETS on the entire fleet is extremely difficult,” says Rasmussen.
In the coming years, there will be a balancing act between supply and demand, and he says this could have a negative impact unless there are upside surprises in demand, to balance capacity reductions caused by congestion delays and to deliver on the strong order book.
