The secondhand container ship market has witnessed a significant surge in demand, leading to rising vessel values and increased sales activity. The past year saw robust freight rates, making it one of the strongest years for secondhand transactions. However, concerns over potential overcapacity loom in the background, raising questions about the sustainability of this growth.

Surging Demand and Rising Freight Rates

The global container shipping industry has experienced unexpectedly strong demand, driving freight rates to healthy levels throughout the past year. This surge has led to higher profitability for shipping companies and a substantial increase in the value of secondhand vessels. The combination of stable demand and limited new ship deliveries has fueled this trend, making secondhand ships a lucrative investment.

Doubling of Secondhand Ship Values

Research from Alphaliner indicates that the value of used container vessels has nearly doubled, reflecting the market’s bullish sentiment. With shipping lines eager to expand their fleets to capitalize on strong demand, the prices for these ships have skyrocketed. This trend underscores the impact of freight rate stability and ongoing supply chain constraints.

Record-Breaking Sales Activity

In 2024 alone, 333 secondhand vessels changed hands, accounting for a total capacity of 1.1 million TEU (twenty-foot equivalent units). This marks a notable increase from the 285 ships (937,000 TEU) sold in 2023. The strong buying interest highlights the willingness of operators to invest in used tonnage rather than waiting for newbuilds, which often come with long lead times.

Historical Market Activity and Comparisons

Despite the recent surge, 2024 ranks as the third-strongest year for secondhand ship transactions. The top two years remain 2021 and 2019, both of which saw inflated demand due to external factors, such as the COVID-19 pandemic-driven supply chain disruptions and trade fluctuations. While the current growth is not as extreme as those peak years, it remains a significant milestone for the industry.

Future Outlook: Overcapacity Concerns

While the short-term outlook remains positive, concerns about overcapacity are beginning to emerge. A potential oversupply of container vessels could result in freight rate declines, impacting profitability in the long run. If global trade slows or shipping companies continue aggressive fleet expansions, the market could face downward pressure on vessel values.

Conclusion

The secondhand container ship market has had an impressive year, driven by strong freight demand, increased sales, and higher vessel values. However, as the industry looks ahead, the risk of overcapacity could become a challenge, requiring careful fleet management and strategic planning by shipping companies. Whether this growth sustains or slows will depend on global trade trends and the balance between supply and demand in the coming years.