FAST FIVE: Container Ship Orders Surge As Firms Race To Add Capacity
Container Ship Orders Surge As Firms Race To Add Capacity About a year ago, shipbreaking was in full swing as the global economy was in tatters.
After Western economies injected trillions of dollars in fiscal stimulus, supercharging consumers, maritime traffic between the US and China has been off the charts, resulting in shipping lines adding new capacity. The latest spending patterns in the West show things are getting back to normal as consumers are using credit cards and debit cards (where the stimmy checks arrive) to buy items mostly made overseas.
They are highly confident about the future and are spending like there is no tomorrow – triggering supply constraints as supply chains remain tangled from the virus pandemic. To deal with the resurgent consumer demand, shipping companies are ordering new container ships to increase capacity. For the first five months of 2021, orders for new container ships doubled all of 2019 and 2020 orders, according to The Wall Street Journal, citing London-based maritime data provider VesselsValue Ltd.
Thanks to stimmy checks and remote working, Western consumers have been on a purchasing spree of products from overseas, and major retailers such as Amazon, Walmart, and Target, have struggled to restock as supply disruptions continue to plague the world. A perfect storm of restocking, supply chain disruptions, major congestion at ports, and freight rates soaring has significantly boosted vessel operators like A.P.
A typical container ship takes 12-16 months to build; some have turned to used vessels where values have been soaring. Data from London-based shipping broker Braemar ACM Shipbroking shows ship orders totaling 2.6 million containers (measured by 20-foot equivalent units) are on pace to surpass annual records of 2.8 million containers' worth of capacity ordered in 2007. “It's been our busiest period in years, and it's very much about container ships,” said a senior executive of South Korea's Hyundai Heavy Industries Co., the world's biggest shipbuilding factory in terms of capacity.