Even though ZIM is holding up ok so far, it might be time to get out of all my positions after earnings. Roughly 10% addition to fleet capacity every year for the next three years:
The overall orderbook stood at 7.69 million TEUs as of Feb. 1, just under 30% of the on-the-water fleet capacity, according to Alphaliner.
Of the total, 2.48 million TEUs (32%) was set for delivery this year, 2.95 million TEUs (38%) next year, and 2.26 million TEUs (30%) thereafter.
Most of ZIM’s ships are chartered so it can manage some of this massive margin compression by right-sizing, but with depressed rates, seems like dividends will be under even greater pressure.
Ship owners (like DAC) will deal with this by scrapping. Because of immense demand, scrapping was very slow these last two years, and can be expected to pick up as newbuilds replace old relics. However, it is not expected to be enough to make up for the impending glut.