Container ship order boom

Container shipping lines are ordering new vessels amid rising demand for box shipping services, giving a long-awaited boost to the outlook for shipyards in Asia. Shipping lines have ordered over 20 large container vessels in January and February 2021 from shipyards in South Korea including Korea Shipbuilding & Offshore Engineering, Daewoo Shipbuilding & Marine Engineering and Samsung Heavy Industries. Chinese shipyards have also won orders, largely from Chinese customers.

With further contracts expected to be awarded in the coming days and weeks, it is anticipated that over US$10 billion of container ship newbuilding contracts will be confirmed from the fourth quarter of 2020 to the end of the first quarter of 2021, one analyst said. Some of the newly ordered ships will be powered by liquefied natural gas to comply with new international pollution standards.

The number of container ships on order rose by 23 to 201 vessels at the end of February 2021, the biggest weekly gain in two years, according to IHS Markit data. Israeli shipping company ZIM and Taiwan’s Evergreen Marine have announced recent purchases or chartering deals which are believed to be behind recent orders reported in Asia. Denmark’s A.P. Moller-Maersk predicts global container demand will increase by between 3% to 5% this year as the world economy recovers from the coronavirus pandemic.

British analysts Clarksons Research estimates the world container ship order book as a share of existing fleet capacity has rebounded from the lowest level in more than 30 years. Since early October, orders for new container ships have increased by 115, with new container capacity of more than 1.1 million TEUs on order. That has raised the total capacity on order to about 2.7 million TEUs, or almost 12% of the existing fleet. Shipping companies seem to be more disciplined about investing in new ships, and some look to be more focused on looking for new sources of revenue or shareholder value, analysts said.

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