Sharp Drop in ‘Newbuild’ Orders
Despite the rising price trend with owners chasing a smaller pool of available assets, sale and purchase activity in the container ship market declined sharply in the third quarter, according to Alphaliner.
Sales volumes fell sharply in the July-September period, with ‘just’ 103 ships with a total capacity of 380,000 TEU sold.
It is a significant drop from the 170 ships of 625,000 TEU which changed hands in the second quarter, with June now marking the peak of the cycle with a record-breaking 73 vessels sold in a month.
Mirroring the general trend, the market’s top buyer, MSC, also slowed its purchases in the latest quarter, snapping up a total of 26 ships of 111,000 TEU, versus 40 units totalling 161,150 TEU in the previous quarter.
The industry as a whole needs to be aware that it is bottlenecks, due to trade wars further exacerbated by COVID-19 that have driven pricing sky-high in recent months and not a significant overall increase in trade volumes.
The peaks and troughs when they eventually and hopefully even out will see rates and service disruptions being reduced – albeit not at 2018 or prior years. If an oversupply of capacity is introduced into the market as a result of new builds coming on line, carriers will have no choice but to reduce rates to compete for a limited cargo pool seeing a repeat of what happened in and around 2008.
