In the corridors and C-suites of many liner companies, one cannot help but think that alarm bells might soon be ringing.
In 2023, almost 200 new containerships have been added to the already bloated order book, pushing it to a record high of just under 8 million TEUS, which is just shy of 30% of the global containership capacity. And all this in a market that is being dominated by falling rates. The World Container Index is hovering around $1,400 per 40-foot container — a year-over-year decline of 54% — and perhaps more troubling is the approximately 70% drop in rates from Shanghai to Europe.
There appears to be nothing on the horizon that will stimulate rate growth over the coming year.
As of now the stimulus for new ordering is perhaps being generated by the huge profits made by the liner companies during the 2020–22 pandemic period and the desire to decarbonize.
Of the new tonnage on order, 83% of the capacity can be affixed as “green,” with methanol accounting for over half and LNG the balance. CMA CGM is the leader in this initiative having committed over $6.5 billion for 36 new dual-fuel (methanol and LNG) vessels, and Evergreen, the leading competitor, has committed over $4.5 billion for 24 methanol fueled newbuildings.
So where does this all end? The leading banks who have signed onto this are subscribers to the Poseidon Principles, a green financing commitment. They are committed to funding the leading operators and clearly see the container liner companies at the forefront of the decarbonization initiative and the lofty “net zero” goals that are being espoused by the International Maritime Organization.
The accelerated growth might be a harbinger of an extended financial tsunami for many of the liner companies.