Feature: Average containership fleet age grows to 14.2 years amid ongoing replenishment

The containership fleet has notched a new record high for average age of 14.2 years -- the highest average age of all three primary shipping sectors -- with nearly 21% of the fleet over 20 years old, BIMCO said in an Oct. 26 report.

The median age of the containership fleet has increased by some 4.3 years since 2010 to 14.2 years, with over 2,516 ships delivered in the intervening time.

At the same time, the proportion of ships aged 20 years or more has reached over 20% of the total fleet, indicating that large swathes of tonnage are fit for retirement and scrapping. With scrapping expected to increase in 2024 and a rush of containership newbuilds set to hit the water in the coming years, the average age of the fleet should begin to decline, according BIMCO.

"Depending on the number of ships recycled, this should allow the average age to decline and the average energy efficiency of ships within all size segments to increase," Niels Rasmussen, chief shipping analyst with BIMCO, said Oct. 26.

The vast majority of ships likely to be sold for demolition are smaller Feeder and sub-Panamax vessels, with TEU capacity below 3,000 TEU.

Even as the market has come to grips with a global demand downturn in 2023, carriers have been slow to offload tonnage to demolishers, despite heavy supply-side surpluses.

Just 0.8% of the fleet is set to be retired in 2023, representing some 215,000 TEU, according to an Oct. 26 report from London-based shipbroker Braemar. This number could increase to 1.8% in 2024 and to 1.5% in 2025 in aggregate, accounting for just over 950,000 TEU, Braemar said.

"300 vessels are currently on order sized between 10,000-17,000 TEU, [and] when these modern neo-Panamax types deliver, immediate pressure on older mid-sized vessels will be swift and severe," the broker said. "With freight markets expected to remain weak in the medium-term ... we do expect a surge of removals of mid-sized units through 2024 and 2025."

Orderbook favors larger size bands

The containership orderbook heavily favors large vessels with capacity of 15,000 TEU and above, and now accounts for some 7.3 million TEU of vessel capacity, according to Sea-web, a ship database within S&P Global Market Intelligence.

Capacity on order currently accounts for some 30% of the total containership fleet.

The rise in popularity for these Ultra Large Container Ships, or ULCS, comes as carriers look to marry scale and efficiency, with fleet-wide energy efficiency rating increasing as newer vessels join the trade.

At the same time, most ship orders placed in 2023 include dual-fuel engines that are able to burn distillate and residual fuels, in addition to engines designed to burn alternative fuels such as methanol and LNG. Methanol-capable boxships on order have ballooned in 2023, accounting for nearly 50% of newbuild orders.