Containership newbuildings have dominated the shipbuilding market in 2021, soaking up berth space in an environment where vessel prices have risen sharply and leaving a question mark hanging over prospects for the coming year.

As 2025 delivery slots for large tonnage start to slim down, some shipbrokers are forecasting lower newbuilding order activity in 2022.

Many were clearly surprised this year by the level of activity, the scale of boxship contracting and the newbuilding price hike that put something of a damper on speculative orders.

Record breaker

Clarksons Research Services managing director Stephen Gordon said 2021 is on course to be the highest on ordering by gt, dwt and cgt terms since 2013.

Gordon said about 1,400 orders have been reported up to 1 November, compared with just fewer than 1,000 by the same point in 2020. He believes orders in 2021 will number around or just over 1,600.

Stephen Gordon: Clarksons Research Services managing director Photo: Aurelien Foucault

This year's figures are led by a record-breaking 4m teu of containership newbuildings, accounting for 44% by cgt and 42% by value of all orders.

Clarksons figures show the boxship orderbook is now 23% of the fleet, compared with 10% a year ago, but over 60% in 2008.

Orders for LNG carriers, VLGCs and car carriers have also added to the mix, while Gordon described tanker and bulker newbuildings numbers as "more modest".

He highlighted the emergence of the offshore wind vessel sector as a small but interesting market with huge growth potential, and said 2021 had also seen a slight rise in traditionally capital expenditure-heavy activity in the market for floating production, storage and offloading vessels.

In the first 10 months of this year, Clarksons Research recorded $94bn of contracts placed, of which just over $40bn were accounted for by containerships.

Gordon said the last year to log this much investment was 2014 when the offshore and cruise sectors were the big drivers.

"This year’s activity on newbuildings was completely unexpected," Arrow Shipbroking's newbuilding team said. "Don't let anyone suggest they predicted it."

Price hike

This year is also likely to be remembered for the year when prices turned upwards, largely driven by rising material costs, in particular steel.

Gordon said overall newbuilding pricing is up about 30% this year, with increases coming in at up to 50% on some of the large containerships.

He said that while price hikes in the first six months were largely the result of shipbuilders' cost pressures, in the second half, yards were buoyed by strong order cover into 2025.

But he thinks they still have understandable cost and inflation concerns.

For 2022, Gordon said that owners — who face technology choices and higher yard prices — and shipbuilders — who have full orderbooks — may both prove more reluctant to move on newbuildings, contributing to slightly quieter or paused markets.

One newbuilding broker said the steel price has now stabilised and newbuilding prices will also level next year.

"We don't see the collision of demand from the different sectors which has allowed yards to name their price," he said.

Newbuilding market watchers said China's yards are looking the most congested on orders at present.

Some expect to see more orders at Japanese yards in 2022 as they open berths to catch hot-priced orders.

No new capacity surge is expected but some Chinese entities are said to be looking at renting space at bankrupt facilities.

New year promise

But some newbuilding brokers think 2022 may hold surprises.

One broker cited tankers as an area that some owners may see as having "recovery potential". He said with modern ships priced at similar levels to newbuildings, some might opt for the latter as they will potentially deliver into an improved market.

He admitted that those ordering next year will have to "get comfy" with higher prices. At present, he said: "When you get to that hurdle of the economics, the horse refuses."

LNG carriers may struggle to find attractive delivery slots, with 2026 deliveries appearing too far out for some.

But containership orders are expected to continue in 2022 as big liner names continue their quests for fleet replacement.

Brokers said the economics of a modern ship are too good to resist, with a new 7,000-teu vessel burning the same amount of fuel as an older 4,500-teu one.

Referencing the sky-high earnings for liner giants this year, one added: "They have so much cash they are going to splash it, aren't they?"