The end of the shipowner frenzy

The cargo ship market is starting to turn. According to the British data service Vessels Value, prices are falling rapidly, orders are falling, and smaller ships in particular are being commissioned. The peak of growth and price jumps in sea transport appears to be over.

Up until a few weeks ago, on the other hand, cargo ships were in demand like never before. The tight capacities caused by the pandemic and disrupted supply chains meant that prices even for used ships went through the roof.

The world market leader among shipping companies, the Mediterranean Shipping Company (MSC) from Switzerland, paid the record price of almost 83 million dollars (83 million euros) last February for a cargo ship built in 2006 with space for 4,300 standard containers. But now this same ship from MSC is worth around 52 million dollars.

There is also a trend in orders: while container shipping companies ordered 621 new ships from shipyards worldwide last year, according to Vessels Value there have been just 355 orders since the beginning of 2022. In addition, these are significantly smaller ships. Instead of freighters with space for 15,000 standard containers, new buildings half the size now dominate the order list. The number of used container ships sold has also halved to 270 transactions since the beginning of the year compared to 2021.

The falling demand for ships is related to the fact that there is less need for sea transport. At the same time, the price for a container transfer from Asia to Europe or the USA, for example, has been falling for weeks - while it had increased almost tenfold in the previous months.

In addition, capacities are also increasing again: In the USA, Asia and Europe, the traffic jams of container ships in front of the ports are getting shorter from week to week, and some of the handling is working as it did before the pandemic.

Economic institutes confirm this development. "The trend of decreasing freight rates in global container shipping is clearly measurable," writes the Kiel Institute for the World Economy. Record prices of 10,000 dollars per container transport are over for the time being.

In the end, consumers will also benefit from this if, for example, shipping the television or garden chair from Asia becomes cheaper - and retailers then pass on the discount.

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