Orders for new boxships reach unprecedented 40% of active fleet
The container shipping market is set for a substantial expansion of vessel supply, as ocean carriers and non-operating shipowners have now ordered over 2.5 million TEUs of new capacity, representing 40 percent of the current fleet.
Investments for new ships ordered during the first 11 months of 2003 reached a record $22.4 billion, according to estimates of U.K. shipbroker Clarkson. The financial commitment to new boxships during the latest 11-month period is more than five times the investment made in containerships during the corresponding period of 2002, Clarkson said. Over 1.9 million TEUs of new capacity was ordered so far this year, Clarkson reported in its monthly research report.
“This level of ordering has now pushed the containership orderbook to an unprecedented 40 percent of the fleet in terms of capacity,” Clarkson said.
Rogan McLellan, director of liner research at Clarkson, cautioned that the record orderbook for boxships does not necessarily mean that it will lead to overcapacity.
“We can forecast supply with a degree of certainty, but what we can’t do is know what demand is going to do,” he said.
Following industry analysts’ comments that overcapacity will return in late 2005, McLellan said that the supply and demand balance in 2005 and 2006 is still difficult to predict. He noted that demand growth in 2002 and in the first half of 2003 was rapid and absorbed additional capacity at that time.
“Analysts are out on a limb when they say ‘the end of the world is nigh’,” McLellan said.
Containership capacity is expected to be fully utilized in 2004. But Clarkson calculated that over 790,000 TEUs of ship capacity will be delivered in 2005, representing about 9 percent of the current container-capable fleet, followed by over 880,000 TEUs due for delivery in 2006.
Carriers have recently placed orders with delivery nearly four years ahead, with some ships due to be delivered at the end of 2007.
In a recent report, the research department of Mitsui O.S.K Lines predicted that the main east-west container trades’ supply and demand will remain largely in balance up to 2006. Cargo growth over this period will keep pace with or even exceed the expected large increase in vessel capacity, as proved the case in both 2002 and 2003, according to the Japanese carrier.