Rising Ship Prices Amid Falling Freight Rates
As of late August 2024, the average per TEU price of a basket of seven five-year-old container ships was $9,761. By the beginning of 2025, that figure had increased to $10,758 and further rose to $11,413 by late August 2025. Feeder ships under 3,000 TEU led the trend, with average prices up 26% year-on-year.
This rise contrasts with freight market performance. Container spot freight rates for Shanghai exports have dropped 51% since late August 2024 and 42% since the beginning of 2025, according to the Shanghai Shipping Exchange. Average freight rates for Chinese exports similarly fell 41% year-on-year and 25% year-to-date.
Time Charter Rates Drive Market Resilience
Despite falling freight earnings, demand for tonnage has buoyed time charter rates. Rates for six to twelve-month charters are up 17% year-on-year and 9% since the start of 2025, mirroring the rise in second-hand ship values. According to Alphaliner, the resilience stems from idle ship capacity remaining below 1% in 2025.
At the same time, container ship newbuilding prices have dropped 4% year-on-year. As a result, the price of five-year-old ships has climbed to 80% of the average newbuilding price the highest relative level since late 2022.
Outlook: Capacity Growth Poses Long-Term Risk
Looking ahead, the container fleet is set to expand further, with 2.3 million TEU of capacity scheduled for delivery in 2025 and 2026 equivalent to 7.2% fleet growth before factoring in recycling. Fleet growth is expected to outpace cargo volumes, raising the risk of downward pressure on both charter rates and ship prices.
However, feeder ships may remain an exception. With only 2.7% capacity growth scheduled in this segment before the end of 2026, prices and charter rates for smaller ships could prove more resilient compared to larger vessel categories.
The container shipping market finds itself in a paradox: weak freight rates are failing to align with rising ship and charter prices. While strong demand for tonnage and low idle capacity are keeping the second-hand market buoyant, long-term risks remain as new vessel deliveries outpace trade growth. For now, feeder vessels stand out as a relatively stable niche in an otherwise uncertain market.
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Source: BIMCO
