Alphaliner head analyst Jan Tiedemann says “for the first time in history”, the latest fleet additions are replacement vessels rather than designed to boost global capacity.
With record container ship deliveries expected this year and next, most analysts have predicted further heavy downside pressure on container shipping freight rates to be offset by carriers’ efforts to reduce capacity by slow steaming, layups or, alternatively, by a self-destructive scramble for market share. However, Mr Tiedemann believes a different picture might play out in the coming years as a deluge of new vessels enter service.
“The thing that makes me hopeful is that, for the first time in the history of container shipping, we’re coming towards a point where some of the orderbook might not be for growth, but for replacement,” he told the latest episode of The Freight Buyers’ Club podcast, produced with the support of Dimerco Express Group. Alphaliner forecasts that a record 385 vessels, totalling 2.22M TEU capacity, will be delivered this year. This new high for box ship deliveries will then be immediately broken in 2024 when a further 391 ships of almost 3.00M TEU capacity are forecast to enter service, including 113 ships of more than 12,500 TEU capacity.
Replacements For The Old
He argues that for the first time, many new deliveries have been purchased primarily as replacements for older, less safe, less clean and less-efficient ships rather than to enable the expansion of containerisation. Instead, he predicts rising vessel scrapping in the coming years, including ships as young as 15 years. “There will still be growth in the market, but to some degree, growth in container shipping is maxed out because there are no more geographies to expand into,” he said.
“We will see, maybe for the first time on a global scale, in the next five to 10 years, a fleet renewal and vessel replacement scheme which means that a [lot] of tonnage will have to go to scrap. And that could concern ships, depending on how the economy and how the trade fares, which are barely 15 or 20 years old at some point.” If lines do not start accelerating vessel scrapping, they will very soon have few deployment options left open, he added.
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