The containership orderbook has reached a record high of 10.4 million TEU, which represents a 31.7% orderbook-to-fleet ratio, the highest since 2010. This surge in orders over the past 12 months is expected to continue, with more than 1 million TEU of new orders still pending for this year. This growth raises concerns about a potential supply overhang, similar to the one experienced from 2004-2009, which took a decade to resolve.
What the Numbers Mean
An orderbook-to-fleet ratio of 31.7% indicates that the number of ships on order is nearly a third of the existing global fleet. This is a significant indicator of future capacity growth. While the current record high is a positive sign for shipyards, it presents a challenge for container shipping companies that will face a massive influx of new vessels into the market.
Historical Context
The last time the orderbook ratio was this high, the market entered a period of severe overcapacity. From 2004 to 2009, the industry ordered a large number of ships, leading to a surplus of available capacity. It took ten years for this surplus to be absorbed, during which freight rates were suppressed and profitability was low. The current high orderbook ratio is causing analysts to worry about a similar scenario in the coming years, with Linerlytica forecasting that excess supply could persist through 2029.
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Source: Port News
