Market Overview of the Three Major Ship Types

Source: Shipping China

Container ship order saturation

The decline in new shipbuilding orders, especially in new container ship orders, reflects a weak outlook for the global economy entering a new stage of high inflation and low growth. The market prosperity has fallen from a high point and container ship orders have reached saturation.

According to VesselsValue's statistics, orders for newly built container ships decreased by 71% from 295 in the first half of 2022 to 86 in the first half of 2023. During the same period, the order volume of newly built container ships accounted for 18% of the total order volume, and the popularity decreased significantly compared to the same period last year.

In addition, according to Clarkson's statistics, the trend of global new container ships becoming larger in the first half of 2023 is more evident. In all newly built container ship orders, the total proportion of large container ships with 12000 to 17000 TEUs and ultra large container ships with 17000 TEUs or above is close to 80%.

Although the global economy is gradually returning to normal, the inflation level in the eurozone is at a high level in the first half of 2023. The European Central Bank continues to be in a cycle of interest rate hikes. European countries continue to face a tightening financial environment and high energy prices, and consumers are forced to reduce spending and demand. Meanwhile, expectations for consumption over the past two years and severe port congestion have prompted many retailers to proactively replenish inventory. These factors all reduce the willingness of shipping companies to build ships.

Looking ahead to the prospects of the container shipping market, on the one hand, the issue of excess capacity in the 2023 container ship delivery market is further highlighted. Clarkson predicts that global container ship capacity will grow by 8.8% in 2023, significantly exceeding demand growth. On the other hand, the International Maritime Organization has introduced various new environmental regulations in recent years to accelerate the modification or elimination of some old ships.

In the first half of 2023, France, Singapore, and Switzerland were the three countries with the highest number of container ship orders. Dafei Group is the most active shipping company in shipbuilding, which has ordered a total of 28 container ships twice, with a total capacity of 486000 TEUs.

On April 6, 2023, DaFei signed a cooperation agreement with China Shipbuilding Corporation to build 16 ultra large container ships, including 12 15000TEU methanol dual fuel powered large container ships and 4 23000TEU liquefied natural gas (LNG) dual fuel powered ultra large container ships, with a total amount of approximately 2.9 billion US dollars. This is also the first time that DaFei has ordered a methanol dual fuel powered container ship with a capacity of over 20000 TEU.

Two months later, DaFei placed another order with a Chinese shipyard to build 12 24000TEU methanol dual fuel powered container ships. The cost of each new ship ranges from $200 million to $250 million, with a total order price of up to $3 billion. The new ship is expected to be delivered and put into operation starting from 2026.

Clarkson's statistical data shows that in the first half of 2023, over 80% of new container ship orders chose alternative energy forms, while this number was only 45% in the same period of 2022. The proportion of methanol fuel in all new energy container ships is close to 50%.

Chris Chatterton, Chief Operating Officer of the Global Methanol Industry Association, has stated that in the long run, the energy transformation and decarbonization goals of the shipping industry towards methanol are consistent. The shipping industry cannot wait for fuel shipping companies that may take decades to obtain approval and supply to start reducing carbon emissions immediately, while methanol can achieve this transformation immediately.

In addition, the large orders for container ships in the first half of 2023 also include: ONE has ordered 10 13700TEU large container ships and plans to deliver them from 2025 to 2026; HMM has ordered 9 9000TEU methanol dual fuel powered container ships with a total price of 1.12 billion US dollars, and is also expected to be delivered from 2025 to 2026.

From the current characteristics and development trends of new ship orders, most liner companies prefer to order methanol fuel powered container ships. Clarkson expects that in the future, improving emissions through the installation of desulfurization towers will eliminate the need for green updates on container ships or partially offset the excess capacity brought by newly delivered ships. In the second half of 2023, the container shipping market will usher in a turbulent period of fleet capacity adjustment and accelerated adaptation to new environmental regulations and changes in market demand.

Bulk carrier orders surged

In the first half of 2023, there was a significant upward trend in bulk carrier orders. The statistical data of VesselsValue shows that the order volume of newly built bulk carriers reached 200, with a year-on-year increase of about 20%. Chinese shipping companies account for more than half of the orders, and Greek shipping companies rank second and third in terms of orders.

Analysts at VesselsValue say that the surge in orders for newly built bulk carriers is a hot topic in the industry in 2023. This is mainly due to factors such as the aging global bulk carrier fleet, environmental requirements, and the recent high freight rates in the bulk transport market, which have sparked shipping companies' interest in shipbuilding. In addition, the growth in transportation demand for major dry bulk cargo categories has also prompted shipping companies to place orders.

In terms of coal, although the pace of coal imports in Europe slowed down in the first half of 2023, the increase in import demand from Asian countries such as China and India compensated for the decline in cargo volume in the European region, coupled with a significant year-on-year increase in coal transportation demand from a lower base in the same period of 2022. In terms of iron ore, the import demand for iron ore in the Asian region has recovered, and the export scale of mines in countries such as Australia and Brazil has increased. In terms of grain, the Black Sea grain export agreement continues to delay Brazil's high grain production and enters the peak shipping period, driving the growth of grain transportation demand.

The main orders for the first half of 2023 include: Shandong Ocean Shipping invested 2.7 billion yuan (approximately 396 million US dollars) to order 12 82000 deadweight ton (DWT) Panamax bulk carriers, which will be delivered using conventional fuel from 2024 to 2025; Dynacom, a subsidiary of Greek ship king George Procopiou, ordered 8 85000DWT bulk carriers with a cost of approximately $37 million each. In addition, Dynacom also signed a letter of intent for the construction of 10 82000DWT bulk carriers with a cost of approximately $35 million each.

Industry insiders have analyzed that a large number of Panamax bulk carriers were built in the market from 1994 to 2000, and these ships will soon be dismantled, requiring new shipbuilding to supplement the market. Overall, it is expected that the global demand for dry bulk cargo transportation will reach 5.631 billion tons in 2023, with a year-on-year increase of 2.7%. Compared with the negative growth in 2022, there is a significant improvement. The demand for iron ore, coal, and grain transportation will maintain stable growth, and a slight increase in demand for small bulk dry cargo transportation is beneficial for shipping companies to place orders in the new shipbuilding market.

Increasing demand for oil tankers

The new oil tanker market is similar to the bulk carrier market.

According to VesselsValue's statistics, in the first half of 2023, orders for newly built oil tankers reached 120 units, with a year-on-year increase of 264%, making it the largest ship type with the highest growth rate. This is mainly due to the changes in the trade market and the increase in oil transportation distance caused by the Russia-Ukraine conflict, which has led to an increase in tanker transportation revenue.

Greek ship king George Procopiou is also active in the oil tanker market, and Greece is also the country with the most ordered oil tankers. Dynacom, a subsidiary of the company, has ordered six ultra large oil tankers (VLCCs) from two Chinese shipyards. Among them, four 320000 deadweight ton VLCCs were ordered from New Era Shipbuilding and two 307000 deadweight ton VLCCs were ordered from Da Shipbuilding Group. The cost of each new ship is approximately 115 million US dollars, and it is planned to be delivered from 2026 to 2027. It is understood that these six VLCCs are equipped with desulfurization devices using traditional fuels, but may also use reserved designs for liquefied natural gas and methanol fuels to ensure the use of green fuels in the future. In addition, Dynacom has also ordered 10 115000DWT finished oil tankers from Dalian Shipbuilding, with a cost of approximately $62 million each, and plans to deliver them from 2025 to 2026.

Looking ahead to 2023, Europe will still be an important market for oil transportation, but the capacity of oil tankers from the Middle East and the Americas will increase. At the same time, the transportation volume from North America to Asia will also increase sharply, which will make the Asian market more interested in oil tanker transportation.

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