News / Box ship buying spree is over, says Braemar, lines must be more selective

Photo: Wes Amelie

The surge in orders for small and mid-sized containerships has largely addressed the structural capacity shortfall that prompted owners to invest heavily over the past two years, according to Braemar analyst Jonathan Roach. 

In today’s Braemar container market development report, Mr Roach said the investment cycle for vessels below 10,000 teu was “entering a new phase”, with future returns likely to depend more on timing and asset selection than simply placing orders. 

“At the beginning of 2024, the outlook was characterised by a clear structural shortage,” he wrote. “Orderbooks were historically low, the fleet was ageing, and demand projections pointed towards a sustained supply deficit throughout the second half of the decade. 

“The conclusion was straightforward – additional investment was required.” 

That outlook drove a rapid ordering spree and, according to Braemar, the orderbook for vessels of up to 9,999 teu grew from around 350 to approximately 1,050 in just two years, with Chinese shipyards providing the necessary construction capacity. 

However, Mr Roach stressed this did not mean the sector was heading towards oversupply. 

“Far from it,” he said, and explained that fleet renewal, tightening environmental regulations, and moderate trade growth would continue to underpin demand for investment in the segment. 

But Mr Roach warned the market was shifting from a broad-based investment opportunity to one requiring greater selectivity, and the balance between opportunity and risk had “become more even than it was 18 months ago”.  

A large number of deliveries are due in 2027 and 2028, and the continued arrival of larger containerships is expected to accelerate vessel-cascading into regional and secondary trades, increasing competition for sub-10,000 teu ships. This would be reinforced by a reopening of the Red Sea route adding further effective capacity into the market. 

“Taken together, these developments point to a different investment environment,” Mr Roach wrote. “The broad, market-wide opportunity that existed in early 2024 is giving way to a more selective phase of the cycle.” 

The analyst advised: “Owners will increasingly need to consider not only whether to invest, but what to invest in, when to order, and where those vessels will trade. 

“The easy investment decisions have largely been made,” Mr Roach concluded. 

“The next phase of the containership cycle is therefore likely to reward discipline, timing, and strategic fleet renewal rather than expansion for its own sake.”