3. Capacity: Record fleet growth to slow in 2025
Summary:
- Fleet growth to slow to 4.5% in 2025, less than half the growth in 2024
- Global ocean container shipping fleet to hit 32.7 million TEU by the end of 2025
- MSC to strengthen status as world’s largest carrier
- OCEAN Alliance to have most capacity delivered in 2025
- 200 000 TEU to be removed through demolition
- As long as diversions around Africa continue, capacity will remain tight but will be eased by new deliveries
- Carriers may struggle to find ships to add to their fleet
The carriers and alliances driving fleet growth
MSC is the single carrier expecting the most new tonnage, with 582 000 TEU scheduled for delivery in 2025* in the form of 46 new ships (source: Clarksons). The vast majority are owned by MSC with nine owned by non-operating owners (NOOs) and chartered to MSC. These deliveries will extend MSC’s status as the globe’s largest carrier, with the new deliveries adding to its current market share of 20% affording it the scale to attempt a non-alliance approach from 2025.
OCEAN Alliance - the only unchanged alliance - will see the most capacity delivered in 2025. The three carriers that make up the alliance (COSCO Group, CMA CGM and Evergreen) have 591 000 TEU scheduled for delivery next year.
The new Premier Alliance - already the smallest alliance after losing Hapag-Lloyd - will see the lowest deliveries of new ships at ‘only’ 230 000 TEU. Looking into the details of the three carriers in this alliance, ONE accounts for 176 000 TEU with HMM making up the remainder, meaning Yang Ming has no deliveries scheduled in 2025. In fact, Yang Ming only has five ships in its orderbook, all 15 500 LNG capable ships to be delivered in 2026.
The only other top 10 carrier not expecting any ships is ZIM. It is waiting for the delivery of six ships in 2024, some of which may only arrive in 2025, but after that has an empty orderbook.
Charter market
Out of the top 10 carriers, ZIM has the highest share of chartered capacity at 91.3% with Yang Ming in third place at 56.9% (Source: Alphaliner). Other carriers also rely heavily on the charter market, but this is often on long-term arrangements agreed with NOOs at the time of the ship being ordered.
Any ambitions ZIM and Yang Ming may have to grow their fleets in 2025 will rely on the shorter term charter market – but this option is limited. Alphaliner reports that, as of the end of September, only 0.6% of the global fleet is idle, of which only one is an NOO ship above 3 000 TEU.
The average charter rate for a 6 800 TEU ship is currently USD 67 500 per day for a 6-12 month contract.
A reliance on the charter market has benefits to carriers, but when the market is tight, they can struggle to find available tonnage at a time when they are most keen to add to their fleet.
Demolition
In the first nine months of 2024, the average age of ships being demolished is 29.2. This is up from the 26.5 between 2020 and 2023, which was much higher than the previous four-year average of 21.8 years.
The key to understanding the outlook for demolition is found in charter rates. High demand for tonnage during much of the past five years mean charter rates have been high, extending the lifetime of older and less efficient ships as even they will be profitable when charter rates are high.
Some will argue that once the strain on capacity eases, carriers will turn to demolition to re-balance the fleet to match that of demand for transportation. However, even if we assume a return to the pre-pandemic average, and assume three-quarters of ships currently over 22 years will be sent for demolition, this would result in 1.8m TEU leaving the fleet.
Even this high level of demolition would not be enough to turn carrier fortunes around in the case of a return to the Red Sea and the inevitable overcapacity in the market given the many millions of TEU delivered over the past four years.
Footnote: *Expected deliveries include Xeneta’s estimates that 10% of contracts will be cancelled and 10% delayed to the following year, whereas scheduled deliveries include all ships with a delivery date in 2025.
“Carriers have taken very different approaches to fleet in 2025, so there will inevitably be some winners and some losers depending how the market develops. This situation creates an opportunity for shippers as long as they understand how to use the varying carrier and alliance strategies to their advantage. While the market remains tight, carriers with the largest tonnage will have the upper hand, but any easing in capacity – especially through a large-scale return of ships to the Red Sea - would transform the situation dramatically and put pressure back onto carriers to maintain market share through aggressive pricing.”
Emily Stausbøll
Senior Shipping Analyst, Xeneta