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Boxship overcapacity means record low orderbook ratio is ‘irrelevant’

Boxship overcapacity means record low orderbook ratio is ‘irrelevant’

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News carried on this site yesterday that the containership orderbook has hit a record low as a ratio to the extant fleet has been deemed irrelevant by a leading shipping analyst.

As of May 1, the orderbook stood at just 14.1% of the extant fleet, according to data from Alphaliner.

However, Peter Sand, Bimco’s chief shipping analyst, has told Splash that this metric is not important. “The ratio is not a relevant measure,” he said. The fact that there is still 3m teu on order was deemed by Sand as far more important for the health of the liner sector. 

“Overcapacity remains significant. It is important to keep new orders very low,” Sand told Splash.

Bimco’s most recent container market view, issued at the end of last month, suggests the containership fleet will grow by 2.9% in 2017, under the assumptions that 450,000 teu will be demolished and 1m teu will be delivered.

Sand has just signed up to become a regular contributor to Splash and our sister title, Maritime CEO magazine.

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Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

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1 Comment

  1. Andrew Craig-Bennett
    May 18, 2017 at 9:31 am

    I would just like to add a rider: the orderbook is irrelevant because demand is unlikely to increase faster than the current trend. None the less, Peter Sand is right to make the point – there is a temptation for naive capital to be drawn in by the shortness of the order book, and since we now know that many managers of that naive capital are “deal driven”, because they make commissions on new orders, the danger is real.