Supply improves in an orderly manner
3.1 Limited increase in fleet size
It is expected that starting from the fourth quarter of 2022, the size of the fleet will gradually transition to an expansion cycle, but the annual increase is still limited. The construction cycle of ships is long, usually 2-3 years. The pace of new ships can be roughly determined by estimating historical orders. From 2016 to 2019, the container market went through a four-year bear market, during which the growth rate of shipbuilding orders hit the lowest point in the past 10 years, resulting in a downward trend in the delivery of new ships in recent years. In 2020, despite the rapid recovery of the container market under the interactive influence of the epidemic and policies, the first three quarters were in a transitional period of bull-bear transition, market confidence was not sufficient, and new orders were limited. Since the fourth quarter, the full recovery of market confidence has led to the recovery of the new shipbuilding market. It is expected that from the fourth quarter of 2022, the new ship delivery situation will gradually be reversed. Before that, the proportion of new ship deliveries is not expected to be too high.
The existing orders show that the theoretical new ship delivery in 2022 will reach 1.102 million TEU, and the first to fourth quarters are expected to deliver 186,000, 28.2, 337, and 298,000 TEU respectively, including 84,000 TEU – the deferred order from 2021. In fact, delivery delays are common in the shipbuilding market. In 2021, about 8% of container ship orders will be delayed, which is a decrease from the level of 26% in 2020. The average decay rate in the past ten years is about 15%. There is still a high probability of order delays in 2022, and the actual delivery volume will be lower than the theoretical value of 1.102 million TEU.
However, considering the gradual relaxation of the epidemic restrictions, the greater pressure on order delivery in 2023-2024, and the fact that the current capacity is in short supply, it is expected that the delay problem will improve in 2022, but there is not much room (the historical minimum delay rate in 2019 is 2%). According to the estimated deferred payment level of 2%-8%, the actual delivery of new ships in 2022 is expected to be 1.014-1.090 million TEU.
Ship scrapping and dismantling is another major factor affecting the changes in the size of the fleet. It is expected that in 2022, the ship dismantling rate will remain low. The increase in ship age will lead to a corresponding increase in maintenance costs and fuel costs, and there are certain safety hazards. Therefore, ships aged 25 or 30 years usually need to be scrapped and dismantled. However, the age of the ship is only one aspect, and the dismantling is also affected by the market. After weighing the dismantling revenue and operating profit, the shipowner can decide whether to scrap the ship. In the bull market, the dismantling rate is low, and the average dismantling age will be There will be increase, and in the bear market, the dismantling rate will increase and the average dismantling age will also decrease.
As of December 2021, the average age of container ships is about 13.4 years, of which the average age of large container ships is about 5 years, and ships over 25 years old are about 464,000 TEU, accounting for only 464,000 TEU in the existing capacity. 1.9%. Beginning in the second half of 2020, the container market has gradually strengthened. Stimulated by profits, the demand for dismantling has dropped sharply, and the average age of dismantling vessels has increased. In 2021, the dismantling volume of ships is only 12,000 TEU, accounting for only 4% of the over-aged ships, and the average age of dismantling ships in 28 years. It is expected that market prosperity will decline in 2022, but the profitability of shipowners will continue to be high compared to before the epidemic. Therefore, the demand for container ship dismantling will continue to remain low in 2022. It is assumed that the dismantling volume is 5%, 10%, 20%, 50%, the dismantling volume will reach 2.3, 4.6, 9.3, 233,000 TEU.
Therefore, under optimistic expectations, the fleet size will reach 25.71 million Waste Sea Containers in 2022, a year-on-year increase of 4.3%; under pessimistic expectations, the fleet size will reach 25.41 million TEU, a year-on-year increase of 3.1%.
3.2 The lack of box constraint no longer exists
The combination of containers and fleets forms the container capacity. The container-to-ship ratio is an important indicator to measure the strong and weak relationship between the ship and the container. Through this data, it is possible to roughly judge the binding effect of the container and the ship on the transport capacity. Generally speaking, only when the number of containers exceeds the load of the ship can the turnover of containers be matched with the turnover of ships. The main reason is that containers are also transported by land, and the turnover of containers is usually slower than that of ships. Only when the number of containers exceeds the fleet size, that is, the container-to-ship ratio is greater than 1, can it be possible to ensure that the transport capacity is not constrained by containers.
China container factory expects container capacity restrictions to remain limited in 2022. With the increase in container production, the shortage of containers is easily solved. Container production accelerated at the end of 2020, production will be close to the capacity limit in the first quarter of 2021, and the production line will be operating at almost full capacity throughout 2021. In 2021, the scale of container inventory will increase by 8.8% year-on-year, the container-to-ship ratio will rise to a high of 1.91, and the constraints on the shipping capacity of containers will gradually relax.
Firstly, if it is estimated based on the container-to-ship ratio of 1.91, the container stock needs to reach 48.5-49.08 million TEU by the end of 2022, which can basically ensure that the transportation capacity is not constrained by containers.
Secondly, the replacement rate of containers in 2021 is about 3.6%, which is also at an all-time high. After the centralized scrapping in 2021 and 2022, it is expected that the proportion of over-aged containers will decrease. Assuming a container renewal rate of 2.5%-3% in 2022, about 1.41-1.78 million TEU. From the above assumptions, it is inferred that the container output in 2022 needs to reach 2.86-3.19 million TEU, that is, the monthly output is 240,000-270,000 TEU, in order to meet the matching relationship between container and ship, that is, the container-to-ship ratio is 1.91. In the third quarter of 2021, the container output will reach 1.8 million TEU, the monthly output is about 600,000 TEU, which is close to the upper limit of production capacity. There is still ample room for flexibility between the 240,000-270,000 TEU monthly production capacity limit.
Thirdly, if the container-to-ship ratio remains high in 2022, the container-to-ship ratio can rise to 2.06-2.09 at the end of the year, close to the high of 10 years ago. It is inferred from this that the probability of the shortage of containers in 2022 is not high, and the constraints on capacity are limited.