Two Shipping Sectors Dominate Global Orderbook with a 50% Share

The global shipping industry is experiencing a seismic shift, with significant implications for shipbuilders, owners, and fleet managers. Data from Clarksons Research paints a vivid picture of the ongoing transformation, where fully 50% of the global order book is tied to just two shipping segments: LNG and containers. In this blog post, we delve into the latest findings and trends, offering insights into the state of the industry, yard capacity, aging fleets, and the looming shadow of green regulations.

LNG and Containers: A Dominant Duo

Clarksons Research’s forthcoming Shipping Review & Outlook publication highlights the stark disparity in order books. LNG orders now account for an astonishing 53% of the existing fleet, while tanker orders make up a mere 5%. This marked contrast showcases the surging demand for LNG carriers and container vessels, driven by the global energy and e-commerce industries, respectively.

The Yard Capacity Conundrum

Notably, shipyard data from the same publication reveals that yard capacity remains 35% below the peaks recorded in 2011. Furthermore, yard slot availability is incredibly tight, with the order book standing at 3.5 times the output from the previous year. This presents a significant challenge for owners of tankers and dry bulkers looking to initiate fleet replacement programs, as they are confronted with prolonged waiting times and elevated prices.

Aging Fleet and Green Regulations

Clarksons data underscores another pressing issue – a staggering 31% of the global merchant fleet is over 15 years old. Moreover, 30% of tonnage ranks in the D and E bands for the International Maritime Organization’s Carbon Intensity Indicator (CII) ratings. This aging fleet, combined with tightening emissions regulations, poses a considerable challenge to the industry’s players.

Yards on the Rise

While the industry has long grappled with contracting shipyard capacity, there’s a silver lining on the horizon. Global yards are finally expanding amidst record-long order books and a growing acceptance that a substantial portion of today’s fleet must be replaced to meet new green regulations. “Yards have got the longest backlog in history, with 2026 soon full,” says Dag Kilen, head of research at Norwegian broker Fearnleys.

According to data from Maritime Strategies International (MSI), shipyard capacity grew by 1.8% to reach 67.1 million gross tons (gt) last year. MSI forecasts that this figure will increase to 69 million gt by 2025, peaking at 81 million gt in 2030. Although these figures are notably higher than current levels, they still fall 26% below the 2011 peak, underscoring the industry’s ongoing challenges and opportunities.

In conclusion, the global shipping industry is navigating choppy waters, with LNG and container shipping dominating the order books, while shipyards grapple with capacity issues. Aging fleets and evolving environmental regulations further complicate the industry’s landscape. Nevertheless, there is hope on the horizon, as shipyard capacity slowly expands to meet the demands of a changing world, setting the stage for a new era in maritime transportation.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.