SIMIC

THE orderbook of new container ships - most of which are slated to be delivered between this year and 2027 - stands at more than 900 vessels, and those will have the equivalent of about a quarter of the existing carrying capacity, according to Drewry.

A surge will pose a challenge from shipyards in China and South Korea, to the corporate marketeers who will have to come up with names for all those newly christened launches.



The bottom line for some analysts: There's too much container supply coming to meet the demand, threatening another spell of depressed ocean freight rates hangs in the balance if the shipping lines don't take steps soon to reel in their capacity, according to Bloomberg.
"There is no way that carriers can allow all of the scheduled newbuild capacity to arrive as planned," Drewry's Simon Heaney said. "So they will have to delay, demolish, lay up and void sailings to tame the overcapacity burden."
It's not only spot container rates that are reflecting a supply-demand balance that's shifted away from the shortages present just a year ago. The Xeneta Shipping Index for January showed a record-large drop in long-term rates - a month-over-month decline of 13.3 per cent.
Heading into contract negotiating season, that's welcome news for the owners of cargo and others who've felt the sting of inflation stemming from soaring freight rates.
"Shippers, well aware of market dynamics turning in their favour, have reacted, pushing carriers for major rates reductions," Xeneta CEO Patrik Berglund said in a recent press release. "What we're seeing now is the effect of that, as new contracts enter validity. And, for the carriers, worse is set to come."
Bloomberg Intelligence's senior logistics analyst Lee Klaskow sums up the outlook this way:
"The container liner industry has a long history of booms and busts. Looking out this year, rates are poised to weaken further from the unsustainable peaks reached in September 2021.
"Since then rates have collapsed by about 80 per cent and will be hard pressed to find support as demand growth will be flat at best this year and supply is expected to increase by mid-to-high single digits according to where the order book stands today. This may result in depressed rates into 2024 since most carriers happily trade price for volumes in what has been an undisciplined, commoditized market."