Newbuilding boom keeps prices high, eliminates early delivery slots

According to shipbroker Hartland Shipping Services, more than 1M TEU of container vessels were ordered in June alone, representing more than 3% of the global fleet. Hartland’s data also shows that on a three-month moving average basis, container ship ordering has returned to its highest level since Q2 2021, the peak of the last newbuilding boom.

Another shipbroking firm, WeberSeas, reported that from January 2024 to the first week of September, a total of 2.5M TEU of new capacity was contracted, raising the global orderbook to 7.4M TEU, equivalent to 25% of the current fleet.

Product tanker boom

Before the recent uptick in container vessel orders, tankers - particularly those carrying products - dominated newbuilding activity.
Hartland data reveals August marked a significant milestone for the product tanker sector, as the orderbook-to-fleet ratio exceeded 20% in terms of deadweight tonnage (dwt). Specifically, the orderbook now stands at 21% of the active fleet, with LR2 and MR tankers leading this surge. The orderbooks for these types represent 39% and 18% of their respective existing fleets.

While the crude tanker sector lags slightly, its orderbook is also expanding, with the current ratio surpassing 10%. Suezmax tankers are particularly noteworthy, with an orderbook representing 17% of the fleet.

COSCO fuels dry bulk orderbook

The bulk carrier orderbook also saw a spike, largely driven by a massive order from the Chinese shipping giant COSCO for 42 vessels, 37 of which are Kamsarmaxes.
Hartland Shipping Services estimates the Panamax/Kamsarmax orderbook is now equivalent to 14% of the existing fleet, making this the most active sector in the dry bulk market. Supramaxes/Ultramaxes follow, with the under-construction tonnage accounting for 12% of the active fleet.
In total, Hartland analysts calculate the overall dry bulk orderbook represents 11% of the current fleet in terms of dwt. Riviera has reported the Chinese government has directed state-owned shipping companies to construct over 100 bulk carriers in the near future.

Record high prices and limited slots

These developments shed light on the current state of the shipbuilding industry. According to Hartland, prices remain high and continue to rise. Intermodal data supports this trend, showing most vessel types across key shipping sectors are priced at, or near, five-year highs. A comparison of year-to-date highs and lows reveals a significant price surge in 2024 alone.

For example, the price of a Capesize vessel has reached US$76.5M, a five-year high, compared with a low of US$67.5M earlier in the year. Similarly, a Suezmax now costs US$90.0M (also a five-year high), up from a low of US$85.0M.

A key challenge in the current shipbuilding landscape is also the scarcity of early delivery slots. Riviera understands owners are struggling to secure delivery windows for 2027 in Tier I shipyards in China and South Korea. For instance, QatarEnergy’s latest LNG carriers, scheduled to be built at China’s Hudong-Zhonghua Shipyard, are not expected to be delivered until between 2028 and 2031.

In response to these market pressures, shipyards are beginning to expand their capacity, as Hartland highlights. Several major Chinese yards are working to enlarge their facilities by building new or re-opening old drydocks, while also bringing more labour and workstreams online to meet the growing demand.