Sea freight sector grapples with shortage of container ships

Global sea freight was severely disrupted by the Covid crisis but is now recovering and prompting a boom new container ship orders as the industry grapples with a shortage of vessels.

Shipping companies, buoyed by soaring freight prices, are splashing out cash on expanding their fleets.

New shipping capacity is now forecast to hit a record-matching level by 2023, steaming ahead as the post-pandemic recovery gathers speed.

"The container ship order book is booming," said Italian maritime brokerage Banchero Costa.

Orders have been placed for at least 276 new vessels in the first seven months of this year which would add slightly more than 10 percent capacity to the large global container fleet as of 2020, according to data it provided.

However, it takes at least two years to build a new ship, so the market will remain overheated in the short term.

Banchero Costa expects only modest 3 percent year-on-year growth in shipping capacity in 2021 and 2022. 

Freight price surge

Freight prices have meanwhile surged in recent months, sparking a major shortage of vessels to meet runaway demand.

The Freightos Baltic Index of international shipping prices shows that rates for the route from China to the West Coast of North America have gone up by more than five times in one year.

"Every single vessel that can float is in deployment right now" by the industry, said Alan Murphy, head of Danish consultancy Sea-Intelligence.