The global containership orderbook, seen as a percentage of the world fleet, has dropped to its lowest level in more than 20 years, new analysis from Alphaliner reveals.
Alphaliner’s July data shows the boxship orderbook-to-fleet ratio now stands at 9.4% or 2.21m teu, marking the first time this key indicator has ducked below the 10% mark this century. The boxship order book has been declining for the last four years. Back in July 2016 there was 3.55m teu of boxships on order.
“The fact that the decline already began four years ago means that the ongoing COVID-19 scare and its knock-on effects on the global economy and the liner trades are not solely to blame for the recent dry spell,” Alphaliner noted in its latest weekly report.
Evergreen and CMA CGM are the two carriers with the largest orderbooks currently.
The current orderbook also shows the vessel pipeline has gaps in several size ranges. For instance, remarkably there are no ships on order in the size range from 4,000 to 9,999 teu except two 5,295 teu sisters that are still on the books of defunct Zhejiang Oahu, a shipyard that went bankrupt in 2018.
With so few newbuilds, the container shipping fleet is getting nearer to a better supply/demand equilibrium, especially with scrapping volumes picking up. With August just around the corner, container shipping demolition has already hit a 41-month high in July, reaching 52,800 teu and thereby surpassing the 50,500 teu demolished in June. In the first seven months of the year, a total of 152,800 teu have been demolished, a 26.3% rise from the same period last year, according to data published by BIMCO today.
Shipowners refraining from ordering new ships is not unique to the box trades. Splash reported earlier this month how new shipbuilding orders across all sectors in the first half declined 57% to the lowest levels seen this century, according to data from Clarkson Research Services. Just 269 ships – equivalent to 5.75m cgt – were contracted in the first six months around the world, putting many yards in jeopardy of running out of business in the coming year.
Commenting on the plight shipyards face today, Dag Kilen, head of research at Fearnleys, said owners were holding back from putting pen to paper for new tonnage over the uncertain green regulatory framework ahead.
“Covid is part of the explanation, but it was a weakening trend there already before Covid which stems from uncertainty on what to do about propulsion and coming stricter emission regulations,” Kilen said.
A report from Danish Ship Finance published in May suggested there will be more than 200 yard closures in the coming months and years.
Half of active yards have not seen any new orders since 2018 and orderbooks are now petering out for many shipbuilders.
Global yard capacity totals 56m cgt, divided between 281 yards. Since 2013, more than 240 yards with a combined capacity of 16m cgt have left the industry. However, much more capacity needs to close, the report suggests.