- The container shipping industry ordered 371 vessels, predominantly LNG-powered, raising concerns about a focus on larger ships.
- Analysts stress the need for innovation in smaller vessels to meet sustainability standards.
- Carriers are balancing orders of larger vessels while committing to alternative fuels for decarbonization.
A review of the container shipping order book, which includes deliveries up to 2029, shows that the top 10 vessel operators largely view LNG as the best fuel choice for the near future, reports Seatrade Maritime News.
The Impact of Larger Vessels in the Industry
The container shipping industry is witnessing significant trends in vessel orders, with carriers placing a total of 371 vessels on order. Among these, 162 vessels, which collectively hold a capacity of 2.2 million TEU, are powered by LNG, and 80 of these vessels exceed 15,000 TEU in size. However, analysts have expressed concerns regarding the industry’s growing preference for larger vessels, potentially leading to an imbalance in the market.
According to Seatrade reports, carriers have ordered a total capacity of 4,843,424 TEU, with a remarkable inclination towards larger vessels rather than smaller feeder ships. Darron Wadey, an analyst at Dynamar, noted that this trend may pose challenges for the industry. He stated, “It is indeed a concern that we might be going top-heavy in terms of the size of ships being ordered. These smaller shortsea vessels are already stressed by the various sustainable yardsticks by which all are now being measured because of their smaller size.” He also suggested that the lack of newer, greener technology for these smaller ships “Will do nothing for the industry’s image”.
Hardships suffered by Smaller Vessels
Wadey pointed out the pressing need for innovation in smaller vessels to align with sustainable practices. Despite the challenges, he highlighted a potential upside: “There is, though, a silver lining. It takes much less time to build a smaller ship, and as yard slots become available, the situation could be rectified relatively quickly.” This indicates a pathway through which the industry could adapt and address some of the existing concerns regarding size and sustainability.
Different Approaches Among Leading Carriers
Seatrade’s analysis also showcases how leading carriers are diversifying their strategies in the current market landscape. Maersk owns 21 ships on order six in each of the 7,500-10,000 and 15,000+ TEU categories and nine in the intermediate, 12,500–15,000 TEU range.
Wadey said: “From the start of its integrator strategy [in 2017] Maersk’s orderbook capacity has not been above even 10% of its current fleet. All it is doing here is more of the same.”
Ocean Network Express (ONE), is another carrier that continued with its strategy of ordering ships in the 12,500-15,000 teu range, with 42 ships in this range.
Wadey said: “ONE and its shareholders have never really gone in for the very largest vessels,” ONE has six 20,200 teu and six 24,100 teu ships all delivered in 2023, “Considering it has nothing else above 15,500 teu, such an orderbook profile is not a departure from previous practice.”
This clearly portrays how some carriers are resisting the trend towards larger sizes.
Perhaps most strikingly, however, is the carriers’ collective embrace of alternative fuels: “The carriers are committed and whilst many will have shared values towards sustainability, the sector is also being pushed/pulled by regulations on the one hand and, increasingly, the demands of major shippers who also have their own sustainability targets,” said Wadey.
In contrast, there is a notable commitment among carriers to adopt alternative fuels in their fleets. This reflects the industry’s broader concern for sustainability, pushed by both regulatory frameworks and the sustainability goals of major shippers.
Wadey also adds, “Let us not forget, we are still talking about very young, if not nascent technologies: the very first LNG fuelled container ship only entered service in 2017; the very first methanol [container] ship only entered service late last year; the very first ammonia-powered vessel (period) is only due this year, let alone an ammonia-fuelled containership.”
As the container shipping sector navigates these challenging waters, the balance between vessel size, sustainability, and technological advancement remains a focal point for carriers and stakeholders alike.
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Source: Seatrade Maritime News
