Coronavirus impact on global trade prompts ship firms to cut back on new vessels
- In October new ship orders as a percentage of the global fleet fell to 7.1 per cent, the lowest level since 1989, according to Clarksons Research
- Many companies opting to charter or buy vessels already in service over commissioning new ones, helping drive up sea freight rates
Shipping companies are spending less on new vessels this year amid a gloomy long-term outlook for global trade, but they are revelling in soaring freight rates, according to industry insiders and analysts.
Last month, new ship orders as a percentage of the global fleet fell to 7.1 per cent, the lowest level since 1989, according to shipping consultancy Clarksons Research.
Orders have slumped across the board, including for tankers, containers and bulk carriers, showing weak confidence among shipping lines, which transport the bulk of international trade.
The empty order books are good news for Danish shipping companies, as a smaller world fleet helps to keep freight rates up
Between June and November, rates from China to the US west coast rose 100 per cent to US$3,851, and 65 per cent to US$4,675 between the mainland and the US east coast, according to Freightos Baltic Index, which tracks daily freight rates.
In the past, ship orders have increased on the back of rising freight rates, but companies are utilising their existing fleets to meet rising demand while taking advantage of higher prices.
Danish Shipping, an industry group, said last month that Danish firms picked up 45 per cent fewer orders in October from a year earlier, but that was not a bad thing.