The Financial Times said, “Global trade is shifting from China to other ports in Asia, a trend that is prompting shipowners to shift from ordering ultra-large container ships to ordering smaller ships.”
The newspaper is based on data from ship broker Braemar, only 6 container ships over 17,000TEU will be delivered in 2025, compared with 17 in 2020. At the same time, 83 container ships between 12,000TEU and 16,999TEU will be completed in 2025, almost five times as many as five years ago.
Braemar container market analyst Jonathan Roach said: “16,000TEU container ships will become the most popular main ship type for liner companies. Lukewarm global trade and the saturation of ultra-large ships have reduced the demand for such ships.”
The threat of environmental regulations and trade disruptions, including last year’s attacks on merchant ships in the Red Sea, have also hit demand for ultra-large container ships, industry sources said.
The Financial Times expects this trend to continue with Trump’s return to the White House this month, with the incoming Trump repeatedly threatening to raise tariffs on Chinese imports.
According to Peter Sand, chief analyst at shipping market tracker Xeneta, “We do see that people are no longer sourcing products only from China.” He added, “The supply chain is spreading to smaller manufacturing centers in other parts of Asia. You can only benefit from this if you have enough goods to fill the largest sized ships. Otherwise you are losing money.”
A senior executive at one of Asia’s largest container shipping lines echoed Peter Sand, saying that “with manufacturing moving to India and Vietnam, it probably doesn’t make much sense to expect mega-ships to fill up in two or three ports.”
The Financial Times and the above industry insiders believe that manufacturing is shifting from China to India and Vietnam, and as a result, shipowners will no longer favor ultra-large container ships and will shift to medium-sized ships of up to 17,000 TEU.
However, on the other side, orders for container ships above 18,000 TEU are still on the rise as profits in the container shipping industry soar in 2024.
A total of 76 ultra-large container ships of 18,000 TEU or more have been ordered globally in 2024 up to the beginning of December, compared to 45 in the same period in 2023. MSC alone ordered ten 21,000TEU and ten 24,000TEU ultra-large container ships from China Hengli Heavy Industries in September and December.
Shipowners’ revenues surged after Yemen’s Houthi rebels launched a series of attacks on merchant ships near the Suez Canal, causing liners to reroute and pushing up shipping costs as fewer ships became available.
“The closure of the Suez Canal has had a severe impact on containerized shipping,” says William MacLachlan, another partner at HFW Lawyers, which provides shipbuilding consulting services, ”and smaller ships can more easily respond to macroeconomic events. ”