Chinese shipyards emerge as the biggest winners! Record-breaking backlog of container ship orders

2022-08-08 09:00

The continuous ordering by shipowners over the past year and a half has pushed the container ship orderbook to a record high of 7 million TEU, and Chinese shipyards, which have secured more than half of these orders, are clearly the biggest winners in this wave of container ship ordering.

According to a recent report by Clarkson, since the 2008 financial crisis, container ship orderbook volumes steadily declined between 2009 and 2020, dropping to a 17-year low of less than 2 million TEU in October 2020. Entering 2021, new container ship orders reached 4.3 million TEU that year; order volumes in the first half of this year also reached 1.7 million TEU, likely surpassing any year before the pandemic.

As of early July, the container ship orderbook totaled 919 vessels or 7 million TEU, an increase of over 250% compared to the trough level in October 2020. The orderbook's proportion of the existing fleet also increased to 28%, a 12-year high, but still far below the historical record levels of up to 61% in mid-2005 and late 2007.

In terms of vessel type, container ship orders in the past two years have mainly focused on several key segments. Of the current 7 million TEU orderbook, as many as 3.3 million TEU are Neo-Panamax vessels of 12,000-16,999 TEU, accounting for 47%, with the 15,000-16,000 TEU design being popular due to offering wide deployment options and good economies of scale. Feeder vessels are also a popular type; the current orderbook includes 359 feeder vessels below 3,000 TEU, totaling 0.7 million TEU. Orders for 3,000-7,999 TEU vessels total 1.3 million TEU, accounting for 19%, mainly comprising 3,000-4,000 TEU and approximately 7,000 TEU vessels. Meanwhile, although there are only 54 Ultra-Panamax vessels on order, their total capacity reaches 1.3 million TEU, accounting for 18%, all being 23,000-25,000 TEU vessels.

As container shipping companies earned high profits during the market boom, more and more carriers tend to buy rather than charter, expanding their proportion of owned vessels. Of the current orderbook, 52% are from shipping companies, with the remaining 48% from charter owners. However, container ship owner Seaspan still holds the world's largest orderbook, totaling 0.8 million TEU, equivalent to 71% of its fleet capacity. This is followed by COSCO Shipping Group, Evergreen Marine, and MSC, each with owned vessel orderbooks of around 0.5-0.6 million TEU.

Alternative fuels are increasingly becoming the preferred choice for shipowners when ordering vessels. Currently, 2.2 million TEU of the orderbook are alternative fuel vessels, accounting for 31%, a significant increase from 23.5% in January this year, with the majority being LNG dual-fuel. In the first half of this year's new container ship orders, 58% can operate on alternative fuels.

Regarding building countries, Chinese shipyards still dominate the container ship sector, with 53% of the current container ship orderbook being built in China, close to the highest record of 56% in October 2021. Furthermore, South Korean shipyards account for 39%, and Japan only 8%.

According to Clarkson's data, by deadweight tonnage, 6 of the top ten shipyards for current container ship orderbooks are from China. These are Yangzijiang Xinfu (ranked 4th with 32 vessels, 4.53 million DWT on order), New Yangzijiang Shipbuilding (ranked 6th with 62 vessels, 3.67 million DWT on order), Jiangnan Shipyard (ranked 7th with 21 vessels, 3.49 million DWT on order), New Times Shipbuilding (ranked 8th with 31 vessels, 3.39 million DWT on order), Hudong-Zhonghua Shipbuilding (ranked 9th with 16 vessels, 2.94 million DWT on order), and Waigaoqiao Shipbuilding (ranked 10th with 34 vessels, 2.72 million DWT on order).

Overall, although the container shipping market is currently in an exceptionally prosperous phase, the record-high orderbook will undoubtedly exert significant pressure on future market supply and demand. It is projected that the container ship fleet size will grow by 8% next year. After several dramatic years, container shipping companies are now considering the future composition of their fleets, driven by fleet renewal needs and concerns about future environmental regulations.

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