Container Ship Orders Hit Record High 'Signal of Global Economic Recovery'

Last Month 72 Ships 860,000 TEU... Similar to Last Year's Total Orders

[Asia Economy Reporter Park Byung-hee] Last month, the number of container ship orders placed by shipping companies reached an all-time high. This is interpreted as another sign that the global economy is recovering from the COVID-19 pandemic.

According to major foreign media on the 7th (local time), last month’s container ship orders by shipping companies totaled 72 vessels, amounting to 866,000 TEU (1 TEU = one 20-foot container). This easily surpassed the previous record of 50 vessels and 570,000 TEU set in June 2011. Last month’s order volume is comparable to the entire annual order volume of last year.

It is analyzed that shipping companies have embarked on large-scale investments based on the profits gained from rising freight rates last year. It is also expected to provide relief to Asian shipbuilders who faced difficulties due to a depletion of ship orders amid the COVID-19 pandemic last year.

Most of the container ships ordered by shipping companies last month were confirmed to be large vessels. The Baltic International Maritime Council (BIMCO) recorded 45 orders for vessels classified as the largest container ships, those with a capacity of 15,000 TEU or more.

Following the blockage of the Suez Canal by the 20,000 TEU container ship Ever Given at the end of last month, concerns about possible regulations on large container ships were raised, but it is analyzed that shipping companies paid no heed to these concerns.

Peter Sand, Chief Analyst at BIMCO, said, "Large vessels are profitable due to economies of scale," and predicted, "Shipping companies will continue to insist on large vessels."

Evergreen, the Taiwanese shipping company that owns the Ever Given, also ordered 20 container ships of 15,000 TEU class last month. There are even forecasts that the Suez Canal incident will prolong the high freight rates and lead to continued orders from shipping companies.

On the 6th, China’s largest container shipping company COSCO announced that its net profit for the first quarter of this year is expected to reach 15.41 billion yuan (approximately 2.6354 trillion KRW / 2.3 billion USD). COSCO’s net profit for the first quarter of last year was only 44 million USD (approximately 49.3 billion KRW). COSCO explained that freight rates rose by 54% in the fourth quarter of last year alone.

COSCO Director Chen Shuai stated that with freight rates rising, an increase in cargo volume is expected in the future. He said, "Inventory levels of U.S. retailers are still low," and added, "With U.S. President Joe Biden signing the $1.9 trillion stimulus bill, U.S. retailers are increasing their inventory and import volumes." The World Trade Organization (WTO) forecasted on the 31st of last month that the global trade growth rate this year will reach 8%, the highest since 2010. This is an upward revision of 0.8 percentage points from the 7.2% forecast presented in October last year.

However, there are concerns that, as during the 2008 financial crisis, order volumes may concentrate in a specific period, leading to oversupply issues in the future. It is feared that there will be an oversupply of container ships in 2023?2024, when the large volume of ordered vessels is expected to be delivered.

Simon Heaney, Senior Analyst at the UK shipping consultancy Drewry, analyzed, "If shipbuilders do not delay delivery times while the current order volume is maintained, they will eventually be cutting their own throats."

This content was produced with the assistance of AI translation services.