How fast is the fleet growing?
by Richard Scott FICS, member of London & South East Branch Committee, 24 September 2021
An important influence has been helping the global shipping industry to move towards a better balance between demand and supply. Fleet expansion has tended to be more controlled than seen in some previous market phases. This feature has been reflected in higher freight rates in several sectors.
But perceptions vary and, occasionally, discordant observations are made. For example, during the recent London International Shipping Week a leading shipowner stated publicly that growth in the bulk carrier fleet has almost ceased. Is that correct? A close look at the statistics suggests otherwise, and the difference between the ‘stories’ is quite large.
According to authoritative data, the world fleet of bulk carriers has already grown this year by well over two percentage points. Figures compiled by Clarksons Research show that deadweight capacity has enlarged from 912 million deadweight tonnes at the start of 2021 to over 935m dwt at mid-September, an increase of 2.5%. Substantial newbuilding deliveries and low scrapping were instrumental.
While calculations for the remaining months to the end of the year depend on assumptions, partly based on guesses, what appears to be a realistic estimate for the fleet’s expansion in 2021 is growth of about 3.5% or possibly a bit more. If that figure proves accurate, it will be almost as high as the 4% or so increases seen in the two preceding years.
Such numbers contradict the narrative of bulk carrier fleet growth almost ceasing. It has not happened yet. There seems to be a stronger possibility, however, that during 2022 a sharp slowdown will occur. The modest global orderbook points to much lower newbuilding deliveries than seen this year, and there is potential for scrapping to increase greatly, the combined effects of which may be a minimal expansion rate.
In the other main market sectors, different trends are unfolding. Estimates suggest that the capacity of the world fleet of tankers may grow by under 2% in 2021, a second consecutive year of slowing. In the container ship segment, by contrast, fleet expansion is apparently accelerating and could reach well over 4% this year, and the fleet of liquefied natural gas carriers could also see an acceleration to about 10% expansion.