The recent surge in orders for mega-ships risks delaying the recovery in liner shipping beyond 2015, according to industry analyst Alphaliner.
The container ship order book has soared to a 14-month high of 3.67 million 20-foot-equivalent units, or 21.5 percent of the existing fleet, following a series of orders for large vessels totaling over 600,000 TEUs in the third quarter. While the orders-to-fleet ratio is relatively low compared to the 2000 to 2013 average of 37.7 percent, the new contracts will add to an already bloated fleet of large ships, Alphaliner noted. The capacity growth rate has risen to 7.6 percent for 2014 and 6.5 percent in 2015, with new deliveries to reach 1.59 million TEUs and 1.42 million TEUs respectively.
The latest orders have mostly focused on larger ships, led by United Arab Shipping Co.’s contract for five 18,000-TEU and five 14,000-TEU vessels last month with South Korea’s Hyundai Heavy Industries. Mediterranean Shipping Co. also booked six 18,000-TEU vessels from South Korea’s Daewoo shipyard under a bareboat charter with China Bank of Communications Leasing and Minsheng Leasing. Additionally, CMA CGM turned to Chinese financiers to fund three 16,000-TEU ships ordered at Chinese shipyards and Seaspan ordered 10 14,000-TEU units in South Korea and China under a long-term charter of Yang Ming.
These orders, triggered by Maersk Line’s contract for 20 18,000-TEU vessels in early 2011, will widen the supply-demand gap over the next two years, with nominal demand growth expected to lag behind the increase in supply.
“The imbalance created by the excess supply could impede the recovery in the liner sector, with no sustainable recovery expected until after 2015,” Alphaliner said.