The capacity of the global fleet has increased to reach a historic high, continuing its steady growth. In 2024 alone, the world fleet grew by about 3.4% to approximately 2.4 billion deadweight tons (about 1.7 billion GT). However, the growth has been uneven across various sectors: the capacity of container ships increased by about 10% last year (following a series of new mega-vessel deliveries), while the tanker fleet grew by less than 1% due to minimal new vessel supply, creating a growing surplus of ships in many businesses.
There are simply too many vessels chasing available cargoes, creating a classic “buyer’s market” where charterers have abundant choices and older ships remain in service longer. Although current deviations around the Cape of Good Hope have temporarily tightened supply, the underlying overcapacity persists. The abundance of tonnage, particularly in the bulk and container segments, continues to disrupt the freight markets and could further depress earnings when geopolitical disruptions ease. Order books have increased after a wave of contracts: 2024 saw the largest influx of new building orders in 17 years against near-record low ship demolition activity, leading to an aging and expanding fleet. In 2024, only 324 merchant vessels were recycled, the lowest annual level in nearly two decades, and in the January-April 2025 period, only 11 vessels have been scrapped. The average age of ships is now about 22.6 years, and a growing share of ships operates well beyond their optimal economic lifespan.
This is of particular concern to insurers, as machinery-related claims remain one of the main causes of loss. The prolonged use of old vessels raises red flags and reinforces the need for more rigorous technical due diligence and condition-based underwriting, especially for vessels over 15 years old. Disruptions in the Red Sea have temporarily increased demand for older ships, delaying scrap decisions. However, once geopolitical tensions ease, this pool of older ships could quickly become obsolete and face accelerated recycling.
Vessel asset values have increased significantly over the past year. New building prices remain high, driven by strong order books and limited shipyard availability.
However, a decoupling has emerged: second-hand ship prices, especially for tankers and bulkers, have increased significantly, often exceeding what their technical condition might justify. This divergence reflects speculative sentiment and a lack of urgency in renewing fleets with new ships. This could complicate underwriting valuations, as older ships have inflated market values that do not necessarily correspond to lower technical risk.
This situation risks compromising the stability of the Hull insurance market as we are likely approaching a storm that could be described as almost perfect. Currently, with aging vessels, rising ship prices (NB’s and second-hand) combined with high repair costs, the insurance market is facing a strong increase in capacity (particularly with the growth of MGAs in the UK market) leading to greater competitiveness and a consequent reduction in premiums/deductibles and an improvement in coverage conditions.
