Market Insight | Week 45
Building on the strong performance observed over the summer, the containership markets remain in solid shape as we head into the pre-holiday season. This positive trajectory is underpinned by several key factors, shaping the market landscape. In USA, a noticeable increase of goods’ imports is witnessed, driven in part by concerns over potential dockworker strikes. This might be supported as well by market’s reflex reaction following Trump’s election and the possibility of higher tariffs on Chinese goods. The frontloading of imports, combined with excess demand on major US trade lanes, is likely to trigger an increase of freight rates. Meanwhile, intra-Asia trade, particularly between Japan, China, and South Korea, is experiencing growth fuelled by increasing consumer demand and robust manufacturing activity, offering a positive outlook for the trade in the region.
A key point for the sector remains the ongoing supply chain disruptions in the Red Sea. The diversion of routes through the Cape of Good Hope, adopted by many industry players (more than 700 vessels are rerouting), are backing up positive market conditions. A possible resolution of disruptions coupled with a subsequent increase in Suez Canal transits could shift quickly market dynamics, pushing freight rates downwards. The situation and developments in the Red Sea will be critical for 2025 outlook.
Environmental policies continue be influential, with focus on achieving greener shipping practices and reducing greenhouse gas emissions. Following the implementation of the Hong Kong Convention for recycling of ships in June 2025, setting more strict regulations for owners and yards towards a more sustainable demolition system, an increase of the demolition activity is estimated for the next years. At the same time, slower speeds are expected to absorb some active tonnage, as operators put efforts to comply with the set of environmental regulations.
Freight rates have slightly retreated in smaller sectors, afte the peak levels reached over summer. The 6-12 month TC rate for an Eco-design 1,750 teus feeder vessel currently stands at $25,000/day, about 22% lower than the peak rate of $32,000/day recorded in July 2024. However, on larger vessels, rates remain above summer levels due to limited availability and ongoing supply chain disruptions. For Neo-Panamax vessels (9,000 teus, Eco design), the 6-12 month TC rate is $97,000/day, ca. 5.4% up from $92,000/day witnessed earlier this year, in July-August.
Shifting to tonnage supply, the containership fleet is expanding at a robust pace of 8.1% year-on-year, surpassing in October the threshold of 30 million teus of aggregate tonnage and counting 6,643 boxships in total. Of these, 1,855 are Eco and 173 able to use alternative fuel. The average age of the fleet is 13.8 years old, with 11% of the vessels exceeding 20 years. After a busy summer of 166 newbuilding contracts, the current orderbook counts 730 vessels totalling 7.6 million teus, representing 25% of total tonnage. Most of these orders have been placed at Chinese, South Korean and Japanese yards. Demolition activity remains subdued, given the current market landscape, with 4 units demolished (of ca. 8,000 teus) by the end of October. Year-to-date, 51 vessels of 72,330 teus have been sent to the scrapyards, compared to 83 vessels (approximately 158,000 teus) demolished in 2023.