The global containership orderbook hit a new record in 2024 as the sector prepares to replace aging ships that are not compliant with new environmental regulations. On the other hand, the scrapping volumes are steadily declining, falling in the last three years well below average figures .
“At the end of 2024, the container ship order book was 8.3m TEU, a new record compared with the previous high of 7.8m TEU in early 2023,” Niels Rasmussen , Chief Shipping Analyst at BIMCO, said.
As 4.4 million TEU were contracted during 2024, the second highest ever, the orderbook grew despite deliveries hitting a new record high of 2.9 million TEU.
“Making up 92% of the order book capacity, ships 8k TEU or larger dominate the order book. The largest segment, 12-17k TEU, makes up 46% of the order book capacity,” Rasmussen added.
Shipyards in China have benefitted the most from the last four years’ contracting boom and currently hold 72% of the orderbook’s 8.3 million TEU while South Korean and Japanese shipyards hold 22% and 5% respectively, according to BIMCO.
Liner operators control 79% of the orderbook capacity, significantly higher than the 61% they control of the fleet capacity. Having already increased from 56% at the beginning of 2019, liner operators’ share of fleet capacity is therefore set to continue growing in the coming years.
Though five ships have already been contracted for delivery in 2030, 99% of the orderbook will be delivered during 2025-2029. According to the current delivery schedule, 0.7 million TEU will be delivered in 2029 while an average of 1.9 million TEU will be delivered during 2025-2028, peaking at 2.2 million TEU in 2027.
As the recycling of ships during the past four years has been limited to 166 ships and 256,000 TEU, the average age of the fleet has increased 1.4 years since the beginning of 2020. Consequently, the number of ships 20 years old or older has risen, and they now make up 3.4 million TEU equal to 11% of the fleet.
If all ships 20 years old or older are recycled during the next five years, the fleet will grow to 35.8 million TEU by the end of 2029 , assuming no more ships are contracted for delivery before 2030. That is equal to 16% growth or average annual growth of 3%.
The segments smaller than 8,000 TEU would see an average annual contraction of 4% while the segments 8,000 TEU or larger would grow on average 7% per year.
“It would require 680k TEU per year to recycle all ships 20 years old or older during the next five years (the current annual record is 657k TEU) but actual recycling is likely to end lower. As long as ships cannot fully return to the Red Sea, recycling will likely continue to be low and at the same time the smaller ship segments tend to be recycled later than average. Therefore, average annual fleet growth during the next five years could end higher than 3%,” Rasmussen concluded.
In a separate report, Intermodal also touched upon the topic of subdued demolition activity observed in recent years. As a consequence, the fleet’s average age has increased, suggesting the need for fleet modernization so that the older units can be replaced with modern, more eco-friendly vessels which are on the rise.
As per Intermodal, the implementation of stricter greenhouse gas emission regulations is expected to support an increase in recycling activity, as older units may need to be recycled earlier than their typical lifecycle.
As explained, the (negative) trend in the ship recycling market can be attributed to several factors, including the good performance of shipping sectors over the year, volatility of local steel markets, fluctuating currency values, and geopolitical dynamics.