With a total capacity of over 8 million TEU, the order books for container ships have reached a new high.
The previous record was 7.8 million TEU last year. One segment in particular stands out in terms of orders. Although deliveries also reached a new record high (2.9 million TEU), the order backlog continued to grow with a new 4.4 million TEU.
“With a 92% share of orderbook capacity, ships of 8k TEU or more dominate the orderbook,” said Niels Rasmussen, Chief Analyst at shipping organization Bimco. “The largest segment, 12-17k TEU, accounts for 46% of the order book.”
Full order books – especially in China
The biggest winners of this development are shipyards in China. They are benefiting significantly from orders from container shipping companies and account for a 72% share. This is followed by South Korea with 22% and Japanese shipyards account for 5%.
Almost four out of five newbuildings are built for liner shipping companies, whose share is therefore significantly higher than the 61% of fleet capacity that they currently control. The share of liner shipping companies is therefore likely to increase further in the future. Industry leader MSC alone ordered ten more Megamax newbuilds in December.
The Bimco figures also show that 99% of the orders will be delivered before 2030; only five ships from the current order books will follow after that. The largest volume – 2.2 million TEU – is scheduled for delivery in 2027.
Only limited ship recycling
The number of ships that are 20 years or older has risen again in the last four years. They currently account for 3.4 million TEU, which corresponds to 11% of the total fleet. The reason for this is the low level of ship recycling: only 166 ships or 256,000 TEU have been recycled since 2020. The majority of older ships are in the segment up to 8,000 TEU – in the coming years, the share of these sizes will shrink by 4% annually, while all others will grow by around 7%. Container shipping is therefore clearly moving towards the larger ship classes. The overall fleet will grow by 3% per year if no further ships are added to the order books for delivery by 2030.
“To recycle all ships 20 years old or older over the next five years would require 680,000 TEU per year (the current annual record is 657,000 TEU), but actual recycling is likely to be lower,” explained Rasmussen. “As long as ships cannot fully return to the Red Sea, recycling is likely to remain low, and at the same time the smaller ship segments tend to be recycled later than average. As a result, the average annual fleet growth could exceed 3% over the next five years.”
Container shipping companies recently raked in high profits
The fact that the order books are currently so full is due to several factors. For example, freight rates increased significantly during the Covid-19 pandemic, which led to higher profits and more orders. Currently, the crisis in the Red Sea, triggered by attacks by Yemen’s Houthi militia, is forcing shipping companies to take a detour around the Cape of Good Hope, tying up even more shipping capacity – and keeping freight rates at a high level again for months.
Environmental regulations, climate targets and emission limits (such as the EU ETS and FuelEU) are also ensuring that the fleet has to be converted. As retrofitting old ships with alternative fuels often no longer pays off, the result is full order books for modern ships.
