Container ship newbuilds reach post-Covid high

Boxship newbuilding orders have burst back into life as the Red Sea crisis has caused freight and charter rates to reach levels not seen since the Covid-19 pandemic.

Clarksons stated that 89 container vessels, amounting to 1.2 million TEUs, have been commissioned in June and the first half of July, the highest run-rate since the pandemic-induced boom, when 910,000 TEUs of new ships were ordered on a quarterly average between 2021 and 2022.

After a long period on the sidelines, charter owners have been notably active recently, accounting for 44% of capacity ordered across June and the first two weeks of July, having previously accounted for just 16% of capacity on order.

Clarksons’ data shows that by mid-July, the container ship orderbook stood at 6.6 million TEUs, up 14% from early June and equivalent to more than 22% of the in-service fleet capacity, though still down from a high of 30% in the first quarter of 2023.

The world’s largest shipbroker observed that the container ship fleet is undergoing rapid growth and record newbuilding deliveries, which hit 884,000 TEUs in the second quarter of the year, a fifth consecutive quarterly record and well above the 10-year average run-rate of 325,000 TEUs per quarter. The fleet grew by 5.7% across the first half of 2024, and is projected to grow by 10% in the full year, compared with 8% in 2023, with deliveries tipped to reach a record 2.9 million TEUs.

Scrapping remains subdued, with improved freight and charter markets delaying the demolition of older vessels; just 36 vessels of 51,000 TEUs were demolished in the first six months of 2024, down 35% on the 2023 run-rate and 65% below to the 10-year pre-Covid trend.

Sales of second-hand ships have also been active, with 71 vessels of 313,000 TEUs changing hands in the second quarter of the year, up 31% year-on-year and the most active quarter since the third quarter of 2021, as liner operators sought in-service vessels to meet demand.

Asset prices have also risen, with Clarksons’ Containership Secondhand Price Index reaching 67 points by the second quarter of 2024, up 16% from the first quarter of 2024 and up 30% from December 2023, though still well below the Covid-era high of 128.5 in early 2022.