The order book for new container ships is climbing to new records. Brokers unanimously report that the contracted fleet capacity has grown to over 10.7 million TEU as at the beginning of October.
In absolute terms, the order book has never been larger. In relation to the container ship fleet in service, the order book ratio has now risen to over 33%. Although this is significantly lower than the peak of 59% in mid-2008 with an order volume of only around 6.8 million TEU, it is still the highest ratio since 2010, when container shipping slid into a decade of crisis following the bursting of the US real estate bubble and the shake-up of the global financial system.
Following a slowdown from a very high level in the second half of 2024, shipbuilding orders picked up again this year. Compared to the beginning of the year, the container ship order book has swelled by around 25% – from around 8.6 million TEU. The lines that are sitting on thick capital cushions after the boom of the corona years continue to dominate. In recent months, however, an increasing number of tramp shipping companies have also stepped forward with projects for small and medium-sized ships under 4,000 TEU, often with employment guarantees from charterers.
Recently, Capital Ship Management Corp., owned by Greek shipowner Marinakis, and Flex Box Shipping, a company registered in Singapore, have been in the spotlight with orders for 2,800 TEU and 1,800 TEU vessels, as well as 8,000 TEU newbuilds. In addition to the heavyweights Maersk (6 + 6 x 18,000 TEU) and CMA CGM (6 + 4 x 22,000 TEU), Asian second-tier carriers such as KMTC (2 + 2 x 13,000 TEU) and Yang Ming Line (7 x 15,800 TEU) have also been very active recently.
It is astonishing that newbuilding activities are continuing at full speed after the freight market has cooled down considerably. According to indices such as the SCFI and the World Container Index, freight rates have slumped by more than half compared to the previous year. Initial analysts are warning that some container lines could post losses in the fourth quarter. Although the Red Sea bypass continues to tie up a lot of shipping capacity and container traffic has continued to increase significantly in the first seven months, the availability of cargo space was already relatively relaxed at the end of the third quarter. The strong fleet growth of the previous year has evidently played its part in bringing the market back into balance.
“Not yet a threat”
Brokers do not yet see the gigantic order book as a major threat in the short to medium term. Fleet growth is expected to slow to around 3 to 4% in 2026 – down from more than 6% this year. From 2027, however, the pressure on the supply side will increase dramatically due to increasing deliveries. Capacity growth could reach over 8% in 2028.
It is unlikely that cargo volumes on the important export routes from the Far East will keep up with this pace. In order to avoid overcapacity, more container ships will have to be scrapped for the first time after a long break – all the more so in the event that shipping returns to the shorter route through the Red Sea.
This could throw some calculations in the large ship classes out of kilter. In the segments over 10,000 TEU, for example, which account for the majority of the order book, there are still no ships over 20 years old that are “ready for scrap”. The situation is different in the feeder segments under 3,000 TEU: according to current fleet data, more than a quarter of the tonnage here is already over 20 years old – with a comparatively low order book ratio in this segment of just 6%
