The containership industry appears to be continuing on its merry path to self-destruction as it continues to order more vessels than the supply and demand equation requires.

Another 171,000 teu were added to the fleet in June, at the same time as spot rates on all the major trade lanes hit record lows as lack of demand combined with competitive forces that saw lines take rates so low they were all but paying to move containers on behalf of shippers.

While July GRIs have offered some sign of relief, the outlook still looks grim.

To counter this, the large alliances are reducing capacity, particularly on the main lane east-west route between Asia and Europe. Maersk and MSC are using smaller vessels, Ocean Three has combined services and the G6 alliance is voiding sailings to take capacity out of the market.

Which begs the question: why order more ships when they can’t even use the ones they already have?

The answers lie in the individual lines’ requirement to create efficiencies and replace older, less flexible tonnage with new vessels that can reduce slot costs. But unless these run fully loaded, the efficiencies do not exist; and with so many ships and so little demand, they do not run fully loaded. It’s a vicious circle that will not end well. Industry observers are already forecasting that most lines will make a loss this year.

In the past month, Cosco has been rumoured to be joining the ordering spree, with a report, still unconfirmed at the time of going to press, that the company is close to closing a deal for nine 20,000 teu boxships, with an option for four more, at three Chinese shipyards: Shanghai Waigaoqiao Shipbuilding, Nantong Cosco KHI Ship Engineering and Dalian Shipbuilding.

Maersk Broker said each vessel was priced at around $150m, and scheduled for delivery in the second half of 2017.

This follows close on the heels of Maersk Line’s confirmation in May of a deal for up to 17 vessels of 19,630 teu at Daewoo Shipbuilding & Marine Engineering, which it followed up just as CI was going to press with signing of a deal with Hyundai Heavy Industries for nine 14,000 teu containerships.

The new vessels will take over their place on the conveyor belt of ship launches that has seen Marit Maersk, the last of its 18,270 teu first-generation Triple-E vessels, delivered. Maersk has a $15bn budget for new vessels, upgrades and equipment over the next few years and is showing no signs of letting up. Its orderbook already stands at 500,000 teu, excluding options, or 16% of its current fleet.

Other deliveries in June included MSC Zoe, which joins sisterships MSC Oscar and MSC Oliver as the largest capacity ships in service, for now.

In total, over 138,000 teu of capacity was delivered in June, spread across 10 vessels, none of which were below 9,000 teu.

At the other end of the vessel lifecycle, only four vessels, comprising just 5,300 teu, went to scrap. While only two vessels were scrapped in May, at least they comprised slightly more capacity, at 6,400 teu.

This month, the largest vessel demolished was only 2,800 teu and was over 25 years old. The youngest vessel taken out of service permanently in June was 21 years old.

Levels of scrapping like this will do nothing to reduce the fleet capacity overload.