Date: Thursday, May 18, 2023
Source: Maritime Executive
Less than 20 months after Mediterranean Shipping Company became the world’s largest container line by capacity, the company is set to shatter another mark becoming the first to surpass the 5 million TEU capacity threshold. Data analysis by Alphaliner suggested the shipping line is not done with its growth possibly adding as much as a third more to capacity based on its orderbook with the growth also marking a shift in the company’s strategy.
In its newest analysis, the data firm calculates that MSC is only weeks away from reaching the 5 million TEU mark. At mid-month, they report the company has a total capacity of 4,956,720 TEU giving it an 18.5 percent market share. In the midst of taking delivery of its new class of 24,000 plus TEU containerships, the largest in the industry, as well as a new class of 16,000 TEU Neo Panamax boxships also building in China, Alphaliner says the threshold will be reached by the end of May.
Equally amazing is the rate of growth for the carrier which began operations in the 1970s with just one ship. Alphaliner reports MSC went from 1 million TEU in 2007 to 2 million in just four years. It took another 10 years till 2017 to reach 3 million and finally passing 4 million in 2021. When MSC bested Maersk at the end of 2021/early 2022 for the top spot in the industry they were at approximately 4.3 million TEU. The carrier has added more than 16 percent to its capacity since then to the current mark.
Changing market dynamics also show a dramatic shift in the company’s strategy. At the beginning of 2022, MSC owned just 260 of its ships with a capacity of 1.5 million TEU while nearly two-thirds of its capacity was coming from vessels mostly on long-term charters. Today, the carrier has 753 ships according to Alphaliner’s Top 100 ranking, but 65 percent are company-owned representing 2.3 million TEU capacity. Brokers have reported that MSC was buying any ship it could and even purchased surplus tonnage from Maersk. Alphaliner calculates MSC purchased 306 containerships with a capacity of 1.2 million TEU since August 2020.
As part of the motivation, or possibly a result of the growth, MSC and Maersk announced in January 2023 that they would be winding down their 2M alliance. They said they would not be renewing the 10-year agreement when it comes up in 2025, although they have already begun to take moves to operate independently on key routes.
In its analysis, Alphaliner points out that MSC’s growth appears to be continuing. The ranking analysis puts the current orderbook at a further 127 ships with a capacity of 1.66 million TEU. If MSC places everything in service without removing older tonnage it could hit 6.75 million TEU in two years reports Alphaliner. They however speculate that the carrier will be thinning the smaller end of its fleet, capacity under 8,000 TEU, estimating that MSC is likely to level off at the 6 million TEU mark.
Maersk by comparison which was at nearly 4.3 million TEU at the beginning of 2022 when it fell to second in Alphaliner’s rankings has thinned its fleet since then. The current ranking calculates Maersk has a capacity of just over 4.1 million TEU for a 15.4 percent market share. They however remain well ahead of the third largest carrier, CMA CGM Group which has a current capacity of just under 3.5 million TEU. The French group however is moving aggressively with its newbuild efforts including placing China’s largest-ever order for containerships last month.
The growth comes as analysts highlight the current overcapacity in the market. The sector placed a record number of new orders in the past two years with much of the conversation turning to how that capacity due to start delivery later this year and more significantly in 2024 will impact the business.