Container Ship Orders Surge As Firms Race To Add Capacity

About a year ago, shipbreaking was in full swing as the global economy was in tatters. After Western economies injected trillions of dollars in fiscal stimulus, supercharging consumers, maritime traffic between the US and China has been off the charts, resulting in shipping lines adding new capacity. 

The latest spending patterns in the West show things are getting back to normal as consumers are using credit cards and debit cards (where the stimmy checks arrive) to buy items mostly made overseas. They are highly confident about the future and are spending like there is no tomorrow - triggering supply constraints as supply chains remain tangled from the virus pandemic. 

To deal with the resurgent consumer demand, shipping companies are ordering new container ships to increase capacity. 

For the first five months of 2021, orders for new container ships doubled all of 2019 and 2020 orders, according to The Wall Street Journal, citing London-based maritime data provider VesselsValue Ltd. Many of the orders were at shipyards in South Korea and China. 

Container ship orders have been so strong that some yards are shying away from quotes and or even renegotiating existing orders for vessels as the price of metals, such as steel, has more than doubled this year. Thanks to stimmy checks and remote working, Western consumers have been on a purchasing spree of products from overseas, and major retailers such as Amazon, Walmart, and Target, have struggled to restock as supply disruptions continue to plague the world. 

A perfect storm of restocking, supply chain disruptions, major congestion at ports, and freight rates soaring has significantly boosted vessel operators like A.P. Moller-Maersk A/S. 

"They are making bucketloads of money, and when that happens, owners invest in new ships," said Peter Sand, a chief shipping analyst at Denmark-based shipping trade body Bimco. "Orders have doubled so far in 2021, nearly reaching the total tonnage ordered for all of last year. I won't be surprised if there is another wave of ordering."

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