Global container fleet growth is projected to surpass demand in the next 24 months, according to Hapag-Lloyd. The company expects the balance in the market to shift in favor of cargo shippers by 2023. It expects global fleet capacity to increase 7% in 2023, double the rate of demand growth.
Shipbuilding orders were strong last year, extending into 2022. Hapag said the industry ordered 4.2 million TEU capacity in 2021 and ordered 1.7 million TEU capacity in the first seven months of 2022. The order book for 2022 is currently equivalent to 28 percent of industry capacity.
While the demand outlook is encouraging, there are some concerns. In Europe, the largest challenges are capacity and equipment. Many inland depots have very low empty stacks, which can result in delays at the Port of Loading. Furthermore, abnormal sailing schedules remain an issue for U.S. East Coast ports. Still, some key ocean carriers appear bullish about future demand and have implemented rate increases for USEC services.
According to Clarksons, the global orderbook for containerships is now at 72.5 million dwt. If all current orders are delivered, the world container fleet is expected to grow by a quarter. With that level of orderbooks, global container shipping capacity will reach nearly 26 million TEU.
As the global economy has grown, the container fleet has also grown. The deadweight tonnage of container ships has increased from 11 million tons in 1980 to 275 million metric tons in 2022. The average age of container ships is 14.1 years, but the average age of tankers is about 12 years. Some ship owners prefer to buy secondhand vessels.
In order to reduce emissions, shipping companies have started incorporating technology for reducing fuel consumption in their vessels. A fifth of the world’s fleet is fitted with energy saving devices. These include Flettner rotors that function like tail-spinning cylinders that allow ships to throttle back during windy conditions. Air lubrication systems are also being used on ships to reduce friction with the sea.
While the demand for containers is slated to outpace supply in the next few years, the number of empty containers at ports is already too high. This is hindering trade fluidity and taking up valuable land capacity in the port. Because of this, logistics companies are looking at alternatives to container delivery. Goetz Alebrand, Ocean Freight Head at DHL Global Forwarding, said, “I’ve never seen this much interest in air freight before.
While the demand for container fleet growth continues to exceed supply, some shipping companies are taking steps to improve the efficiency of their existing fleets. Some companies are slowing down their vessels, which could cut fuel consumption by as much as 30%.