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Tonnage providers’ fleet shrinks as market turns

Tonnage providers have lost 2 million TEU of ships to liner operators as vessel sales shot up from mid-2020 to mid-2022, even though ship sales have tapered off recently with the correction in the freight market.

Alphaliner’s latest report, released on 23 November, noted that since August 2020, tonnage providers have sold more than 600 boxships, amounting to 2 million TEU, to liner operators which furiously acquired second-hand ships to manage rising charter costs at the time.

Currently, tonnage providers own 2,555 boxships, down from more than 3,000 vessels back in 2020. Many of the ships sold to liner operators have been in the 700 to 9,000 TEU range.

Tonnage providers have around 250 ships in the 700 to 9,000 TEU range, amounting to 1 million TEU, on order, although these levels are insufficient to replace vessels sold to liner operators. Alphaliner opined that ships of the classic Panamax type, the 3,000 to 5,000 TEU range, are unlikely to be built in large numbers as the compact 7,000 to 8,000 TEU designs are gaining popularity.

However, in the past two months, pre-owned ship sales have dwindled as liner operators’ fortunes have reversed.

Alphaliner noted, “Fast falling cargo and charter rates and rising risks of a global recession have prompted many carriers to temporise on their ship acquisitions projects, waiting for more clarity in the direction of the market. This has caused second-hand vessel prices to fall, but not enough to convince buyers to return. Certain carriers like MSC, which after acquiring a mind-blowing 250 second-hand vessels since August 2020 seem to be however still considering selective acquisitions, but the buying spree is clearly over.”

The French consultancy added that rising newbuilding prices and increasing global economic uncertainties amid Russia’s ongoing invasion of Ukraine, will discourage tonnage providers from committing to more newbuilding orders.

Liner operators, flush with cash now, are also opting to order newbuildings themselves instead of turning to tonnage providers.

Martina Li
Asia Correspondent

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