New Build Ships Continue To Flood In

The flood of new build Ultra Large Container Vessels (UCLVs) has continued over the past couple of months despite the low level of demand in global container shipping.

Carriers received a further 200,000 teu of new build tonnage in July, which directly followed a record 300,000 teu that was delivered in June. It's difficult to understand how fleet managers are continuing to find employment for vessels during this down cycle, especially considering the current blanked sailing programmes impacting Asia routes.

Last month's arrivals included three 24,000 teu ships and we have already seen two more hit the water this month. Our understanding is that these vessels are all being deployed on the Asia-North Europe trade lane, and will replace smaller vessels that will move to the transpacific and secondary routes.

The latest ULCV, delivered by a Chinese shipyard, is the 24,188 teu OOCL Felixstowe, which is understood to be the fourth in a series of 12 being constructed for OOCL.

This year's injection of capacity could probably not have been timed worse. However, these ships often take around 2-3 years to build, at a cost of $150m-$200m, and would have been ordered when rates were near to the record high levels we were witnessing during the pandemic.

All of the main ocean freight carriers, with the exception of Maersk, have huge order books for ships that are still to be delivered. The loadstar report that in the next three quarters there may be as much as 2.4 million teu of new build tonnage due, and unless there is a dramatic turnaround in the global economy it is difficult to see how and where this capacity can be deployed.

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