Alphaliner: Orderbook Hits 15.12m TEU, 43.9% of Fleet; Maersk Eyes 12+12 at 24,000 TEU

The Analysis

Alphaliner puts the global container orderbook at 15.12m TEU, 43.9% of the fleet in service, with roughly 40 more large-ship orders expected before year end that would take the total close to 16m TEU. The headline deal is Maersk in exclusive talks with Chinese yards for twelve dual-fuel 24,000 TEU ships plus twelve options, at about $5.76bn. Capacity is then due to rise 9.2% in 2027 and 14.4% in 2028. Commercially idle tonnage is 0.8% of the fleet and charter rates are at a four-year high.

Three of those numbers do not survive contact with a calculator, and one of them is the one everybody is quoting.

Start with the easiest derivation in the whole story, which no headline printed. If 15.12m TEU is 43.9% of the fleet, then the fleet is 15.12 divided by 0.439, which is 34.44m TEU. That is your denominator for everything below and it is worth having, because almost every argument about this market is an argument about what is happening to a number measured against 34.44m.

Second check: near 16m TEU from about 40 more ships. Sixteen less 15.12 is 0.88m TEU. Spread over 40 ships that is 22,000 TEU a ship. Forty times 22,000 is 880,000. The figure stands up, and it tells you something the sentence does not: the pending orders are almost all very large ships, which means they are almost all going on the long east-west trades, which is where the rate pain will land.

Now the Maersk number, and this one is wrong as written. Twelve firm ships at 24,000 TEU is 288,000 TEU, which is 1.9% of the entire world orderbook for one transaction. Divide $5.76bn by twelve and you get $480m a ship, or $20,000 per slot of capacity. A 24,000 TEU dual-fuel newbuilding does not cost $20,000 a slot on any quotation I have seen; the working figure I use is $230m to $260m, call it $10,000 a slot. Divide $5.76bn by twenty-four instead, the twelve firm plus the twelve options, and you get $240m a ship and $10,000 a slot, which lands exactly in that band. So $5.76bn is the twenty-four ship figure. The twelve-ship reading is a unit error, and it makes Maersk look like it is paying double. Somebody at some desk is going to run with that.

Build the fleet path before you argue about it. Fleet today, on my derivation, 34.44m TEU. Add 9.2% for 2027 and you have 37.61m. Add 14.4% on top of that for 2028 and you have 43.03m. Two years, from 34.44 to 43.03, is growth of 24.9%.

Say that number out loud, because it is not the number in the story. The story gives you 9.2% and 14.4% and leaves you to add them, and if you add them you get 23.6%. Compound them, as the fleet actually does, and you get 24.9%. The difference is 1.3 points, which on 34.44m TEU is about 450,000 TEU of capacity that does not exist in the version most people are carrying around. Small error, in the direction that flatters the carriers.

Now hold that 24.9% against the orderbook, because this is the part nobody reconciled. Growth of 24.9% over two years on 34.44m TEU is a net addition of 8.59m TEU. The orderbook is 15.12m TEU. If all of it delivers inside those two years, then 15.12 minus 8.59, which is 6.53m TEU, has to leave the fleet. Six point five three million TEU is 19.0% of today's fleet, in twenty-four months. That is 9.5% of the fleet scrapped per year.

Container scrapping has run at one to three percent of the fleet a year for most of the last decade. Take the middle, two percent, over two years: 1.38m TEU goes. Then the fleet in 2028 is 34.44 plus 15.12 minus 1.38, which is 48.18m TEU, and growth is 39.9%, not 24.9%.

So the two headline numbers in the same story cannot both be true on their own terms. Either the 9.2% and 14.4% are net of a scrapping assumption that nobody published and that would have to run at five times the historical rate, or a large share of the 15.12m TEU orderbook is scheduled to deliver after 2028 and the growth forecast only covers the part that lands in these two years. I do not know which. What I know is that a 6.53m TEU gap is sitting between two sentences of the same report, and until somebody closes it, plan against the bigger number. Planning against the smaller one is how a treasury ends up budgeting 2028 on a fleet that is 40% larger.

The 43.9% itself has one more defect, and it is the same one the Suez count has. Nobody publishes what is inside the numerator. Somewhere in those 15.12m TEU there are hulls ordered to replace hulls that will be scrapped, hulls ordered to replace capacity lost to slower steaming and longer routings, and hulls ordered purely to grow, and the three behave in completely different ways. Only the third kind adds to the market you actually buy in. A fleet that is simultaneously ageing has to order more just to stand still, and a single ratio cannot tell you which part of the book is treading water and which part is a wave. Sitting with that ambiguity is uncomfortable. It is also the honest position, and it is why I would rather you modelled the delivery schedule than quoted the percentage.

Ask your analyst one question, in writing: of the 15.12m TEU on order, how much is contracted to deliver in calendar 2027, how much in 2028, and how much in 2029 and beyond. If they cannot answer, they are quoting Alphaliner, not modelling it.

Now the Maersk deal itself, because the money in it explains why the orderbook will not stop. Twelve firm ships at 24,000 TEU. On my reading of the $5.76bn, that is $240m a ship. Run the asset. A 24,000 TEU ship is 12,000 FEU of slots if you load it all 40ft. Put it on Far East to North Europe at six round trips a year, which is my assumption for a Suez-routed service at current speeds. At 85% headhaul load that is 10,200 FEU a trip, 61,200 FEU a year. At the Shanghai-Rotterdam print of $3,686 that is $225.6m of headhaul revenue a year. Take off operating cost, which I will put at $11m a year, and net is $214.6m against a $240m ship. Payback is 1.12 years.

Read that again. Thirteen and a half months. And I have left the backhaul out entirely, which is revenue the ship also earns, so if anything the payback is faster than I have drawn it. Now ask what freight rate makes an order like this unattractive. Set the hurdle at ten years, which is still a short life for a hull that will trade for twenty-five. Ten years needs net annual cash of $24m, plus $11m of opex, so $35m of headhaul revenue, over 61,200 FEU, which is $572 per FEU. Shanghai-Rotterdam is $3,686. The rate would have to fall 84.5% before this ship stops pencilling.

That is the answer to why nobody is cancelling orders. The orderbook is not a bet on rates staying where they are. It is a bet that rates stay above roughly a sixth of where they are, and on a twenty-five year asset with a fifteen year financing tail, that is a bet most boards will take every time. If you are waiting for the orderbook to shrink before you re-tender, you are waiting for something that has no mechanism behind it.

Here is the point I have not seen anywhere, and it is the one that should change how you read the rest of the report. Commercially idle tonnage at 0.8% is being written up as evidence of a tight market. It is the opposite. It is the reason the next two years have no shock absorber.

Think about what idle capacity does in a normal cycle. When supply runs ahead of demand, the marginal ships come out: the oldest, the least efficient, the ones on short charters. They park, the idle percentage goes from one to three to five percent, and that parked steel is how the market absorbs an overshoot without the freight rate doing all the work. In 2015 and 2016 the idle fleet went into the high single digits and it took years of pain with it. Today there is nothing to park. At 0.8% commercially idle, every hull that can trade is trading. So when 8.59m TEU of net capacity arrives over 2027 and 2028, the entire adjustment has to happen in one variable, and that variable is price.

Run the floor. Take a 14,000 TEU ship, 7,000 FEU of slots, on a 42-day transpacific round trip, chartered at what I will assume is $70,000 a day. Charter for the round trip is 42 times $70,000, which is $2.94m. Bunker at an assumed 120 tonnes a day and $600 a tonne is 5,040 tonnes, $3.02m. Terminal handling at an assumed $350 a move on 9,100 loaded moves is $3.19m. Panama and other dues at an assumed $0.6m. Total round trip cash, $9.75m. Now the revenue side: 6,300 FEU eastbound at 90% load, and 2,800 FEU westbound at 40% load and an assumed $700, which is $1.96m. So the eastbound leg has to produce $9.75m minus $1.96m, which is $7.79m, over 6,300 boxes: $1,236 per FEU.

Shanghai to Los Angeles is at $7,514. For a chartered ship on those assumptions to stop covering its own cash cost, the headhaul rate has to fall 83.5%. Nobody is laying up tonnage at $7,514. Nobody is laying up tonnage at $3,000 either. The 0.8% is not a tight market. It is a market where the cash arithmetic is so far above water that there is no voluntary exit anywhere in the system, and the only thing that will remove capacity is a rate collapse deep enough to break charter covenants.

And the denominator is about to move underneath all of it, for free. Sixty-two Suez transits in the week, the highest count of the year, is in the same week's news. Every hull that goes back through Suez instead of round the Cape finishes its rotation sooner and produces more slot-miles a year on the same steel. Assume a Far East to North Europe round trip of 72 days via the Cape against 60 days via Suez: 5.07 rotations a year becomes 6.08, about 20% more effective capacity per hull. Assume 15% of the fleet is on that trade, and the fleet-wide effective gain is about 3%. No capex, no newbuilding, no orderbook line, three percent of extra capacity landing on the same market that is about to take 24.9% of new steel.

So spread the 2027 number over the lanes, since 9.2% of the world fleet is not a thing anyone ships on. Net fleet growth in 2027 is 37.61 minus 34.44, which is 3.17m TEU. Allocate it, and these percentages are my assumption, not Alphaliner's: 40% to Far East-North Europe, 30% to the transpacific, 10% to the transatlantic, 20% to intra-Asia and the north-south trades. That is 1.27m TEU into Europe, 0.95m into the Pacific, 0.32m into the Atlantic, 0.63m everywhere else.

Take the Pacific slice, because that is where the money is. Eastbound transpacific volume runs around 20m TEU a year, my assumption. An extra 0.95m TEU of capacity on that base is 4.8% more supply in twelve months, before anyone has grown a single customer. Assume the trade starts at 88% load factor; 0.88 divided by 1.048 is 0.840. Four points of load factor gone. The rough rule of thumb I use, and it is a rule of thumb, is three to five percent of rate per point of load factor on a headhaul lane. Four points is 12% to 20% of rate pressure. Shanghai to Los Angeles at $7,514 becomes $6,011 to $6,612. Call the 2027 spot centre $6,000 to $6,600.

Do the same for the Europe slice, because that is where I think the surprise is hiding. Far East to North Europe gets 1.27m TEU of net new capacity in 2027. On an assumed 24m TEU a year of volume on that trade, that is 5.3% more supply. Then add the free three percent from the Suez rotations on top, because both effects land on the same lane in the same year. Call it 8.3% of supply into a trade where the rate is $3,686 and a brand new ship pays for itself in thirteen months. The lane everybody is watching is the Pacific, at $7,514. The lane I would watch is the one at half that, with more capacity arriving and a shorter distance to fall.

Now you have something to negotiate against. A 2027 contract offered to you today at or above today's spot is not a contract, it is a donation. On my numbers the forward centre is $6,000 to $6,600 and the risk is asymmetric to the downside, because the 2028 number is 14.4% again on top.

The other side of it, because I am not going to hand you a one-way call. Four things could break this. Scrapping could accelerate: to make 24.9% reconcile with the orderbook, it has to run at 9.5% a year, and it has never done that. Watch the scrap price of a twenty-year-old 4,000 TEU ship against its charter value; when scrap beats charter, the fleet starts shrinking and my whole argument weakens. Deliveries could slip: dual-fuel vessels are more complex to build and six to twelve months of slippage is ordinary. If 30% of the 2027 slate slides into 2028 or 2029, plus 9.2% becomes plus 6.4% and the Pacific gets 0.67m TEU instead of 0.95m.

Demand could surprise: you would need something like 12% a year for two years to absorb this fleet, which has happened exactly once, in 2021, and is not a planning case. And the idle number could be wrong in the other direction: commercially idle excludes slow steaming, which is the industry's favourite invisible capacity cut, and it excludes ships out for retrofits. At 0.8% there is not much room for the number to be overstated, but slow steaming is a real lever and carriers will pull it before they park anything.

Which hubs and which lanes take the wave is Tomás Ferreira's side of the desk rather than mine, and his answer will be more specific than mine about where the boxes pile up. My answer is blunter: the wave lands wherever the spread is widest, and today that is the Pacific, at 2.04 times the Europe lane.

So here is the lock rule, and it runs opposite to the usual one. In a market with this orderbook, the mistake is not failing to lock, it is locking too early at the wrong level. Do not sign a 2027 annual rate at today's spot. Cap any twelve-month transpacific rate at $5,900 per FEU, which sits under my forward centre rather than on top of it, and only sign it with a six-month repricer that triggers on an 8% move in either direction. Keep no more than half your 2027-28 volume on any fixed rate at all. Put the rest on an index-linked clause and re-tender every six months while the orderbook is above 40% of the fleet.

Then one line that runs the other way, because there is always a line. If Shanghai to Los Angeles prints above $8,400 and it is being driven by a capacity shock rather than a GRI announcement, a canal closure, a labour stoppage, a war risk rerouting, that is the market changing shape and not the market being talked up. Past $8,400 on a real shock, lock half of 2027 the same week. The distinction is not the price, it is the cause, and you can only tell them apart by reading the reason on the advisory instead of the number.

The buy signal for 2028 is not a freight rate at all. It is the idle percentage. When commercially idle tonnage crosses 3%, real capacity is finally leaving, and that is the week to sign a two-year deal, because the bottom of a shipping cycle is marked by ships being parked, not by rates being low. Charter rates falling 30% off the four-year high is the early version of the same signal, since owners feel that before they park anything.

There is a certain comedy in watching an industry order 43.9% of its own fleet while 0.8% of it sits still, and then describe the result as tight. The ships are not even built yet. The maths already is.

If you want one date from me: put the idle percentage and the delivery schedule on the same page you use for your rate dashboard, and look at them once a month. The freight rate will tell you what happened. Those two will tell you what is about to, and they will do it about four quarters earlier.

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— By Vivian Zhao