There are indicators that the demand for global containerized trade will slow down this year. Data in the first half of 2023 has said it. Coming to the second half, the condition is still uncertain. There is no sign of demand increase. On the other hand, supply is expected to increase significantly this year and next year. Alphaliner forecasts that a record 385 vessels, totaling 2.22M TEU capacity, will be delivered this year. This new high for box ship deliveries will be immediately broken in 2024 when 391 ships of almost 3.00M TEU capacity are forecast to enter service, including 113 ships of more than 12,500 TEU capacity.
For the last 20 years, the global container fleet has grown by roughly 1M TEU every year,” a rate he believes is unsustainable in the coming years given the previous success of containerization penetration and the lack of new markets to target.
With this condition, will it impact oversupply and further freight rate fall? Many analysts have predicted further heavy downside pressure on container freight rates to offset carriers’ efforts to reduce capacity by slow steaming, layups, or, alternatively, a self-destructive scramble for market share.
However, Alphaliner believes a different picture might play out in the coming years as a deluge of new vessels enter service. What makes Alphaliner hopeful is that, for the first time in the history of container shipping, the industry is coming towards a point where some of the order books might not be for growth but for replacement.
Alphaliner argues that for the first time, many new deliveries have been purchased primarily as replacements for older, less safe, less clean, and less efficient ships rather than to enable the expansion of containerization. Instead, he predicts rising vessel scrapping in the coming years, including ships as young as 15.
Alphaliner, there’s not much more slow steaming the shipping lines can implement because they are already slow steaming. There are no more commodities you can expand container shipping into because everything is already containerized with very, very few exceptions.
Read ISG Cover Story July 2023: https://theshippinggazette.com/shipping-industry-uncertainty/
