The orderbook for container ships has fallen 10.3% in the past 12 months to its lowest level since September 2003 as a consequence of the COVID-19 crisis.
The fall has been driven by the scarcity of new orders for vessels as the drop in trade volumes and long road to recovery loom, according to a new analysis from the Baltic and International Maritime Council (BIMCO).
In the first seven months of the year, orders for new container ships were down 37.7% year-on-year.
Nonetheless the fleet continues to grow as the supply of new deliveries continues to outpace new orders. Deliveries of container ships in the first seven months are down 39.5% from the same period from last year. But as deliveries have still outpaced new orders, the orderbook has contracted.
This year’s deliveries include nine ships above 23,000 TEUs.
“Contracting activity has been quick to feel the effects of the pandemic with owners and investors showing little appetite for new ships,” said Peter Sand, BIMCO’s chief shipping analyst.
Meantime, demolition activities have also increased as many owners are keen to get rid of their existing ships.
As major demolition nations around the world have eased their lockdowns and once again opened their yards, June and July saw a strong uptick in demolitions, said the report.
Container ship demolitions have increased by 26.3%, and 152,770 TEUs of container ships have been sent for demolition since the start of the year.
“The sharp uptick in demolitions following the reopening of yards is entirely expected due to the demand shock from the Covid-19 crisis and expectations of a long road to recovery ahead of us,” explained Sand.
“This is reflected in both the higher demolition numbers, with owners pushed to act on older and substandard ships that they had kept sailing until now, as well as the drop in contracting as the outlook for the next few years has become much gloomier than it was at the start of the year,” he added.
Despite the rise in demolitions and decline in deliveries in many sectors, the fleet continues to grow because in volume terms, deliveries are much higher than demolitions. The container shipping fleet has grown 1.2% since the start of the year.
The continued increase in the supply of ships, despite higher demolitions and lower contracting, comes as the volume of world trade is set for a considerable drop this year, and is not forecasted to return to pre-pandemic levels until at least 2022.
“While the decline in contracting will result in slowing fleet growth in the coming years, balance in the shipping markets may prove elusive for many years to come,” said Sand.
Photo By Acaro – Own work
