Order boom continues! Two 'big ships' continue to lead the way in the new shipbuilding market

2022-06-29 09:00

Following the explosive trend of last year, orders for container ships and LNG carriers have reached new highs this year, continuing to lead the new shipbuilding market.

According to a recent report released by Clarkson, from the fourth quarter of 2020 to June 23, 2023, the total number of new container ship orders reached 889 vessels with a capacity of 6.7 million TEU, equivalent to 29% of the fleet size at the beginning of the fourth quarter of 2020. In 2021, new container ship orders accounted for 18% of the operating fleet size at the beginning of the year, and this proportion reached 7% from 2022 to date. The growth in container ship orders is mainly due to the surge in freight rates and ship charter rates, boosting the confidence of shipping companies and ship owners.

Meanwhile, since the beginning of 2018, the total number of new LNG carrier orders has reached 370, equivalent to 79% of the LNG carrier fleet size at the beginning of 2018. In 2021, the number of new LNG carrier orders reached 86, a record high; and from 2022 to date, new orders have exceeded the total number for last year, reaching 92, equivalent to 15% of the operating fleet size at the beginning of the year. The long-term growth trend of LNG carrier orders stems from multiple factors, including demand from large-scale projects, a rush for ships due to limited ship delivery slots at shipyards, and the overall positive sentiment in the LNG market amid tight natural gas markets and prominent energy security issues.

Although the global total backlog of orders currently accounts for only 10% of the fleet size (in terms of deadweight tonnage), the backlog of orders in the container ship sector accounts for 28% of the existing fleet (in terms of TEU), and the backlog of orders for LNG carriers is even higher at 40% (in terms of cubic meters). In contrast, the backlog of orders for tankers accounts for only 5% of the existing fleet, and for bulk carriers, it is only 7%.

However, Clarkson points out that although the proportion of new container ship orders to the fleet last year was the highest since the financial crisis, there was a more astonishing order boom in the container ship sector in the 2000s. In 2003 and 2007, new ship orders accounted for 35% of the existing fleet, and from 2003 to 2008, container ship orders reached 11.7 million TEU, equivalent to more than 190% of the fleet size at the beginning of 2003. During the previous boom period, shipping companies and ship owners also invested heavily in ordering ships.

Meanwhile, the number of new LNG carrier orders last year and this year has indeed set a historical record, but in terms of the proportion of new ship orders to the existing fleet, it is still lower than the previous highest level. From 2000 to 2007, the average annual new LNG carrier orders accounted for 27% of the existing fleet, and this proportion reached 20% in 2014. However, it should be pointed out that the size of the LNG carrier fleet in the 2000s was much smaller than it is now, and the previous order volume was also much lower than the total order volume of 59 million cubic meters since the beginning of 2018.

Data shows that from 2003 to 2008, the total number of new ship orders for various ship types reached 978 million deadweight tons, exceeding the 864 million deadweight tons of the global fleet at the beginning of 2003. From 2006 to 2008 alone, new tanker orders were equivalent to 54% of the fleet size at the beginning of 2006 (in terms of deadweight tonnage); bulk carrier orders were even more exaggerated, reaching 341 million deadweight tons, equivalent to 99% of the fleet size at that time. Following the market's response to China's economic stimulus policies after the financial crisis, new bulk carrier orders in 2010 also accounted for 22% of the fleet that year.

Therefore, Clarkson believes that compared to the "super cycle" of the 2000s, the current order boom is not new, although the statistics are striking. Looking ahead, fuel transformation will drive large-scale fleet renewal, and as ship fuel technology becomes clearer, fleet renewal may also accelerate, so the new shipbuilding market will see more potential "order booms" in the future.

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