Not surprisingly, capex spending for container shipping lines has been trending downwards this year, with the pandemic and global trade wars weighing heavily on many minds
And while global container trade has proved remarkably resilient, as MSI container shipping analyst Daniel Richards points out, it will shrink in 2020 for the first time in 11 years thanks to countrywide lockdowns imposed due to Covid-19.
While Covid-19’s effects will linger well into 2021, global trade is bound to recover. Shouldn’t container shipping lines start thinking about renewing their fleets? Shipbuilding levels are at historic lows and only a handful of orders have been placed this year, the most notable of late being Zodiac Maritime’s six 15,000-TEU container ships ordered from South Korea’s Daewoo Shipbuilding & Marine Engineering, according to BRL Shipping Consultants. These will be the largest in Zodiac Maritime’s fleet when they are delivered in 2022 and 2023.
Among smaller units, Lepta Shipping ordered five 3,500-TEU feeder ships at China’s Jiangsu New Yangzijiang, with an option to order five more vessels. Lepta Shipping is a joint venture between Nissen Kaiun and Japanese trading house Mitsui & Co.
Drewry points out that the “current orderbook-to-fleet ratio is the lowest this century.” The UK shipping analyst believes more orders could be in the offing, but with a particular slant towards smaller units that “offer deployment flexibility.” Drewry cautions, however, that investing in new ships “always represents a gamble because shipowners do not have advance knowledge of the conditions in which those assets will operate” over their 20+ year lifecycle.
The heavy contracting of 2013-15, when mega-ships were all the rage and some 5.4M TEU was ordered, meant the industry was banking on a strong demand run in the intervening years, which did not materialise. The unprecedented capacity management tactics by carriers in 2020 can be viewed as the correction required for betting too hard on one side just a few years earlier,” says Drewry.
If owners do invest in new tonnage, how will they hedge their bets when it comes to selecting their pathway to decarbonisation? What propulsion will they select since these assets will still be operating after 2030, when IMO is targeting a 40% reduction in CO2 emissions by 2030 across international shipping?
As evidenced by its flagship, CMA CGM Jacques Saadé and its eight 23,000-TEU sisters under construction in China, CMA CGM is betting heavily on LNG. It plans to have 26 LNG-fuelled container ships in its fleet by 2022.
When it comes to LNG as fuel, Hapag-Lloyd is also sticking its toe in the water, with the pioneering conversion of its ultra-large container ship Sajir in China as a pilot project. Not cheap – at US$35M – the conversion could lead to retrofits of 16 other gas-ready box ships in Hapag-Lloyd’s fleet. With a long-term goal of carbon-neutral shipping, Hapag-Lloyd managing director Richard von Berlepsch says the company believes “in gas as one of the most promising pathways into an environmentally friendly future.” The selection of LNG would allow the box ship giant to switch to lower carbon-intensive bioLNG or synthetic LNG in the future.
MSC has been building a fleet of massive ultra-large container ships (ULCSs) led by MSC Gülsün equipped with hybrid scrubbers that it says have “the lowest carbon footprint of its class, down to 7.49 g of CO2 emissions per one tonne of cargo moved one nautical mile.” While all the ULCSs have a gas ready notation, the Geneva-based shipping line is keeping its options open to achieve carbon neutrality.
What is clear is that while many shipowners might take a different path, the destination will be the same: decarbonisation.