Carry on, Captain…

In a market that is still plagued by overcapacity, this week will have witnessed a remarkable wave of orders for large container ships. Ship owners seem torn between the poor state of the industry, which should discourage them from placing orders, and the temptingly low prices for containership newbuildings.

The past few days’ numerous orders are a clear indicator that the newbuilding sector has bottomed out in terms of price, or at least that the majority of ship owners do believe so. In other words: For those who planned new vessel orders anyway, the time to firm up had finally come.

Assuming that all of the recently reported orders actually do materialize and that all the attached options will be taken up, no fewer than 33 large container ship deals have been closed in the past few days. These include three 16,000 teu ships for CMA CGM from Samsung plus three options, five 14,000 teu ships for UASC from Hyundai plus six options, five 18,400 teu ships for UASC from Hyundai plus one option and five 9,000 teu ships for Costamare from Hanjin Philippines plus five options.

Together, these 33 ships would have a capacity of about 453,000 teu, some 2.4% of the global containership fleet. Based on estimated newbuilding prices and information relayed by market sources, the average per-teu slot cost of the 33 vessels would be just under USD 8,000. This represents a 20% discount compared to two years ago, when shipping lines such are Maersk, APL and Evergreen paid between USD 9,500 and USD 10,500 per slot for large containerships – ships that are actually being delivered now.

While it has to be acknowledged that, so far, most of the aforementioned orders are only at a letter-of-intend stage, it does seems highly likely that most of them will actually turn into firm commitments very soon. Whereas the orders do make perfect sense for individual shipowners who take advantage of a buyers’ market and gain access to newbuildings at rock-bottom prices, the continued ordering of extra capacity does add to the industry’s prime concern: massive and lasting overcapacity.

As so often in the maritime industry, placing orders at the bottom of a cycle is a gamble that might either pay off or backfire. Since delivery times are quick these days, many of the big ships ordered today will already be launched as soon as 2015.

Whether less than two years will be a sufficient amount of time for the market to recover significantly and for overcapacity and large-scale idling of ships to disappear remains a question unanswered.



  1. Pingback: Week 24 at a glance | linervision
  2. Pingback: Container ships of 12,000 teu and larger: overview of existing ships and orders by vessel type. | linervision

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