Container Shipping Industry Overview: December 2021
The container shipping market is heavily dependent on consumer spending, which was severely impacted during lockdowns across the globe. The short-term outlook for the container market appears strong. Increased spending on retail goods, combined with low fleet growth and port congestion, has paved the way for an extremely positive environment, taking freight rates to new highs. The market has created an urgent need for vessels, propelling secondhand prices to levels not seen since before the financial crisis in 2008. The favorable conditions are set to continue in the coming months due to restocking and further port congestion reducing the active fleet. The fleet will expand massively in 2023 and 2024, driven by an inflow of 15,000+ TEU vessels, while we expect demand growth to level out. The need for scrapping will increase.
Figure 11: Change in Container Volumes from 2019
On main trade lanes and the rest of the world
For the rest of 2021, 40 new vessels will be added to the fleet, while 144 will join in 2022. This corresponds to 2% and 4% of the fleet, respectively. The inflow will be driven by 15,000 TEU+ vessels, whose fleet is set to expand to the tune of 14% by the end of 2022. In contrast, the mid-sized fleet (3,000-12,000 TEU vessels) will receive hardly any new vessels in the same period. By September of 2021, newbuilding orders for the year had surpassed the previous record for annual orders. Vessels equaling 3.9 million TEU (16% of the fleet) have been contracted. We expect most of these vessels to be delivered in the second half of 2023 and in 2024. In this 18-month period, fleet capacity is set to grow by 12%, driven by an astonishing 40% expansion of the 15,000+ TEU fleet. Investments in LNG as a transition fuel explain some of the orders, but the main driver of future capacity expansion seems to be shipowners’ expectation of the current high demand for containerized goods continuing.
Strong retail consumption, combined with supply chain disruptions, has created extremely positive market conditions. On average, box rates are up 112% in 2021. The three-year time charter rate has followed the same trajectory and has increased by 123%, reaching $89,000 per day for a 9,000 TEU vessel in October. The average time charter length has now passed four years. The five-year-old second-hand price for an 11,000 TEU vessel rose 85% in the first three quarters of 2021, from $84 million to $155 million.
Regional trade has benefited from the redirection of trade caused by the supply chain disruptions, which has boosted the segment. As of October, the three-year time charter rate stood at $73,200 per day, while the five-year-old second-hand price for a 6,800 TEU vessel reached $135 million.
Figure 12: Container Ship Fleet Growth (2016A–2022E)
Looking for a more in-depth analysis of the international shipping industry? In addition to the container shipping industry, we also take a deeper look at the dry-bulk sector, tanker shipping, offshore supply vessels, cruise lines, ports/terminals, and more in our comprehensive 69-page Maritime & Offshore report.
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