Container ships drive 119% jump in total new orders in first five months of 2021
Total orders of dry bulk, tanker and container ships in the first five months of the year have
jumped 119.7% compared with the same period in 2020, primarily driven by record high containership contracting, as investors in this segment find themselves flush with cash. So far 43.6m DWT oforders have been placed at shipyards, towering above the 19.8m DWT at the start of 2020, whenorder levels were lower due to uncertainty at the start of the pandemic. In all of 2020, 49m DWT was ordered, a level which is only 5.5m DWT above the level reached in just the first five months of 2021.
Although not matching the staggering growth in container ship contracting, demand for new crude oil tankers has been strong, up 47.4% from the first five months in 2020, despite the freight market being much more profitable than currently. Oil product tankers on the other hand have seen a fall in contracting, whereas dry bulk contracting, despite the strong freight and S&P markets, is only slightly above last year’s level.
“The vast amount of money pouring into container shipping is finding its way into the shipyards, with the current tightness in the supply of ships incentivising some owners to expand their fleets. Although also making good money in the current market, dry bulk owners have been more reluctant to order new tonnage, with the second-hand market proving more popular,” says BIMCO’s Chief Shipping Analyst, Peter Sand.
“The tanker market is split in two. We are seeing a rise in contracting for crude oil tankers, as owners who filled their coffers during the height of the market last year are betting on a better market when the ships are delivered, whereas oil product tankers are proving less popular,” Sand says.
Money from the container freight and charter markets pouring into shipyards
It has been a truly record-breaking start to the year for containership contracting, with 2.2m TEU being ordered. This is more than 12 times higher than the 184,254 TEU ordered in the first five months of 2020 and more than 60% higher than the previous record dating back to the start of 2005.
The most popular ship type, measured in TEU as well as number of ships, has been Ultra Large Container Ships (ULCS) which have a capacity of 15,000 TEU or higher. 89 of these have been ordered with an average capacity of 16,622 TEU. This however masks that no ships between 16,000 and 23,000 have been ordered, with demand polarised between 15,000 and 16,000 TEU ships on one side and 24,000 TEU+ ships on the other. In fact, there are 14 orders for ships between 24,000 and 24,100 TEU, larger than the biggest ship currently in the fleet which has a capacity of 23,964 TEU. Far more popular have been 15,000 to 16,000 TEU ships of which 75 have been ordered, totalling 1.1m TEU.
“The biggest of the ULCS are proving less popular with carriers seeing the 15-16,000 TEU ships as a better option. This is because they still offer solid savings from economies of scale while not putting the same limits on flexibility as the 20,000+ TEU ships have in terms of trading patterns,” says Sand.
The three big shipbuilding nations are the only ones to have cashed in on the high containership contracting, with China winning the most deals (145), South Korea in second place (63) and Japan rounding out the trio (21).