Container shipowners’ fleets and Chinese shipyards’ portfolios are growing. More ships to sail along the Northern Sea Route

By Marek Grzybowski

Over 7,150 vessels can carry containers, of which over 6,350 are vessels designed to carry containers only. In October 2024, this fleet, with a deadweight of over 369.2 million tons, was able to take on board almost 31,138.5 thousand TEU containers, according to Alphaliner. Reduced traffic in the Panama Canal and threats in the Red Sea have led to the consolidation of Atlantic liner connections. Logistics operators are trying to activate the northern Arctic route around Russia.

According to BIMCO, the fleet capable of carrying containers numbered 6,699 vessels at the beginning of November this year. The three leading container ship operators currently control 46.7% of the market. The top five control over over 65% of the market. The next five operators, from the top ten, control only less than 20% of the market.

According to Alphaliner, the cargo space on container ships reached 30 million TEU in mid-June 2024. The pace of growth of the global container fleet is extraordinary this year. – It took the industry about 50 years to reach the level of 5 million TEU in 2001 – recalls Tim Yuan, CEO of Dongguan Bowin International Freight Forwarding Co., Ltd. In comparison, it took only seven years to go from 20 million TEU to 30 million TEU.

In early November, Niels Rasmussen, Chief Shipping Analyst at BIMCO, stated that in October this year, shipyards achieved a new annual record for container ship construction contracts. “This comes just ten months after the start of 2024, the delivery of container ships to shipowners,” reports BIMCO’s latest “Shipping Number of the Week”. This was brilliantly illustrated by the experts from the Global Maritime Hub, who highlighted the clearly growing order book for container ships after 2022.

According to Rasmussen, 410 ships with a capacity of 2.5 million TEU left the shipyard by the end of October this year. This means that after just 10 months, deliveries of new ships exceeded the previous annual supply peak from 2023. At that time, shipowners took delivery of ships with a total capacity of 2.3 million TEU from the shipyard. Since older ships were not withdrawn from service, deliveries this year increased the size of the container ship fleet by 2.4 million TEU (8.7%) since the beginning of 2024. According to BIMCO, “The container ship fleet currently consists of 6,699 ships with a capacity of 30.4 million TEU.”

More TEU capacity by 32%

Since the beginning of 2020, the capacity of the global container fleet has increased by 32%. This is the result of an acceleration in deliveries in the first half of the decade. At that time, ships with a capacity of 7.8 million TEU were delivered to shipowners. This is the largest volume in the five-year period of implementation of contracts for new container ships.

The effects of these increases can be seen in the market. When you take into account the leading carriers, you will notice significant differences. The 10 largest carriers control over 85% of all containers transported by ships. As a result of mega container ship orders, MSC and Maersk – the two largest carriers – have an average capacity per ship of over 7,100 and 6,100 TEU, respectively.
Photo: Alphaliner

The remaining shipowners outside the top 30 have a much lower average capacity of around 4,300 TEU per ship. Many shipowners, including Maersk, are optimizing liner connections. This may limit the entry of the largest container ships into the Baltic Sea, including the Baltic Hub.

Despite the rapid expansion of the fleet, container ship owners are still placing orders for new ships. This year, the contracts are already more than twice as large as last year. The order portfolio has recently increased by 286 ships with a capacity of 3.3 million TEU – the BIMCO expert calculates.

In June this year, shipyards had secured the production of ships with a capacity of 5.9 million TEU. In November this year, the contracts amount to 7.6 million TEU. And this corresponds to about 25% of the total fleet capacity – emphasizes Rasmussen.

Container ship through Arctic ice

The Chinese shipyard’s order portfolio also includes ice-class container ships. This is the result of closer cooperation between Russia and China in activating the Northern Route. After seven shipments along the Northern Route in 2023 and more than a dozen crossings in 2024, the Chinese NewNew Shipping Line plans to further develop the line and expand its services to include container shipments to ports located along the Northern Sea Route.

As part of the Russian-Chinese joint venture, the company plans to build five Arc7 ice-class container ships. The ships will be used for the Arctic Express connection. The container ships will carry cargo between Shanghai and Ningbo and St. Petersburg and Arkhangelsk. The cooperation was recently promoted by a representative of Atomflot at a shipping forum in St. Petersburg, High North News reported.

NewNew Shipping Line already offers several ships with a lower ice class. However, they can travel along the Northern Sea Route from July to November. It is assumed that the new ships will allow the shipping season to be extended into the transitional period and even into the winter months. Although no additional details about the size or construction of the ships have been disclosed, earlier information is cited. A few months ago, a demand for 15 ice-class ships with a capacity of up to 5,000 TEU was announced.

Warmer temperatures and the extension of routes around Africa have made the Northern Sea Route attractive to container ship operators. Therefore, over the past two years, the number and size of container ships on the Arctic route has increased. Several larger container ships with a capacity of almost 5,000 TEU have already appeared this summer in 2023. In its latest report, the Norwegian Logistics Center detailed that around 145,000 tons of containerized cargo were transported between Russia and China this summer.

As of September 30, Norway’s Center for High Logistics recorded 79 sailings on the Northern Route. An estimated 2.38 million tons of cargo were transported during this period. Of this, the share of container cargo is about 6% or 153 thousand tons.

Record demand for containerships
Ice-class containerships will therefore remain a marginal part of the contracts in Chinese shipyards. However, China will be the main supplier of standard container ships. And demand for them is still growing.

– This year, 478 containerships with a capacity of 3.1 million TEU will be launched, 41% more than the record set in 2023, brokers BIMCO have calculated. The containership fleet is expected to grow by 10% in 2024. Orders for ships continue to flow to Asian shipyards. Reports this week say that some of the most prominent Chinese shipyards currently have contracts for production until 2029.

However, of this number, more than 5,000 ships and about 29 million TEU are currently in the hands of 30 carriers worldwide – accounting for about 72% of all ships and more than 95% of all TEU – according to Alphaliner. The five largest carriers control the market and create the main demand for new units.
Hapag-Lloyd recently signed contracts with Chinese shipyards for 24 container ships, which will be built by 2029. The container ships will increase the capacity of the shipowner’s fleet by 312,000 TEU. The value of the contracts will amount to approximately USD 4 billion. The first ships are to be delivered to the shipowner from Hamburg in 2027. A dozen container ships with a capacity of 16,800 TEU each will be built by Yangzijiang Shipbuilding Group. Another twelve with a capacity of 9,200 TEU each have been contracted with New Times Shipbuilding. We wrote about it here.
This year’s order book is currently slightly lower than the record 7.8 million TEU at the beginning of 2023. Leading shipowners have ordered containerships with a total capacity of 5.9 million TEU. Container operators control 78% of the order book, but have 60% of the global fleet capacity. BIMCO states that as a result of the signed contracts, “their fleet will grow faster than the order book” of other investors. This trend has been ongoing since the beginning of the rapid growth of the container shipping market and has deepened significantly in the last decade. “So far this decade, the fleet of operational owners has grown by 41%, while the fleet of non-operational owners has only grown by 18%,” BIMCO calculates.

Chinese shipyards with a full portfolio
In 2024, China took over 80% of all container ship contracts booked in 2024. Chinese shipyards have been the main beneficiary of the growth in container ship orders for several years. As a result, Chinese shipyards currently have 61% of the global order book for container ships.
A good illustration here is the activity of the aforementioned Yangzijiang Shipbuilding group, whose contracts value reached USD 16.1 billion, including the contract to build a series of ships for Hapag-Lloyd. The group is currently buying land to increase production capacity.
Ships with a capacity of 12,000 to 17,000 TEU have determined a 42% increase in the capacity of the world’s container fleet since the beginning of 2020. This trend will continue in the coming years, as they have a 47% share of the global order book for new ships. Container ships with a capacity of more than 17,000 TEU TEU contributed to 25% of the fleet growth in 2020 and account for 27% of the order book in terms of capacity. Around 0.5 million TEU are expected to join the global fleet by the end of this year. This will increase the capacity of the container ship fleet by almost 3 million TEU in 2024.

– Over the next four years, an average of 1.7 million TEU container ship deliveries per year are planned, and 0.3 million TEU will leave the docks in 2029. However, we can expect further orders for ships that will be delivered in the next five years – says Rasmussen.

Will the container ship fleet grow as dynamically over the next 5 years? Probably not. Because older units will be replaced by increasingly modern ships. Such as those introduced by the operator from Hamburg. The new container ships will have low-emission gas-powered engines. They will also be adapted to be powered by biomethane or ammonia. Older units will be scrapped.

This situation will apply to both large and smaller shipowners’ fleets. Investors who allocate ships for charter must also take into account the replacement of ships. Therefore, the current ratio of the order book to the fleet, which currently stands at 25%, will certainly change. It will depend on the size of the ships sent to scrapyards.

Rasmussen calculated that by 2025, “3.4 million TEU will be over 20 years old”. This is the result of shipowners slowing down the pace of transferring ships to scrapyards in recent years. However, it should be expected that shipyards in Bangladesh, India, Pakistan and China will have more work in the coming years. Container ship operators will send more ships to the beaches. Then the ratio of newly introduced units to the operating fleet may decrease significantly. By as much as 10%.