Global container shipping outlook: pressure mounts amid flood of new capacity
The container shipping market has become used to cyclicality over the decades, and it experienced an unprecedented peak in 2021 and 2022 with record rates and profits for liners.
But with consumers starting to reduce their higher goods spending, against a backdrop of a global economy reeling from an inflation shock and rapid rate increases, the demand slowdown is intense. Consequently, spot rates on major trade lanes have quickly dropped. But it’s the subsequent wave of investment in new vessels that will become noticeable in the years ahead. As container boxes contain food and non-food consumer products, but also capital equipment, semi-finished products and raw materials, it highly correlates with global trade. But container traffic has been more extreme recently.
Ship recycling market solidifies slow activity and lack of tonnage
The ship recycling market hasn’t shown any signs of change over the past week, as slow activity amid a lack of tonnage, seems to be the norm these days. In its latest weekly report, shipbroker said that “there is no change to the rhythmic pattern experienced over many weeks from the regular reporting of slow activity, lack of tonnage, etc as the Eid Al-Adha festivities that are taking place this week have created even quieter market conditions. Despite the odd trickle of container units rippling into the market, which is evidenced by the sale reported below, this lack of available tonnage certainly looks set to continue for the next few months whilst Owners focus their attention on their summer holidays.
Global shipping outlook: it’s all about capacity as the tide turns
Global trade slipped into contraction at the end of 2022, following the rationalisation of piled-up inventories and the economic and industrial stagnation in the US and Europe. Global trade has also entered a period of lower growth due to geopolitical concerns, protectionism, and supply chain reconsiderations. Growth is therefore set to remain low into 2024 and this means that shipping tonnage is also under pressure. Nevertheless, we still expect a stronger second half of 2023 once consumer spending on goods picks up alongside a normalisation of spending patterns, reduced inventories and wage growth.
Global shipping poised to get new emissions-fighting strategy
“Humanity is in dangerous waters on climate,” UN Secretary-General António Guterres said in a video message at the start of MPEC’s latest session.
“Science tells us it is still possible to limit global temperature rise to 1.5 °C, but it requires an immense and immediate global effort, and shipping, which accounts for almost 3.0 percent of global emissions, will be vital.”
The decisions “you take over the coming days could help us chart a safer course”, he said, urging Committee members to agree on a strategy forward.
Dry bulk market: China’s coal imports a major factor in the market
China’s seaborne coal imports have grown by 97.3 percent during the first five months of 2023, marking a significant shift in cargo flows and demand for dry bulk carriers. In its latest weekly report, shipbroker said that “anticipation are high that the current downward momentum in the market will be reversed by the recovery of Chinese demand, however, when we examine the numbers, it becomes evident that Chinese demand for both iron ore and coal is far from weak. The negative trade activity can be primarily attributed to various factors, including the decline in European coal demand, reduced grain export activity, as well as congestion levels returning to normal. Despite these challenges, the overall Chinese demand during Jan-May was positive and resilient”.
Destination net zero
The net zero targets of major container shipping lines are much ambitious than the International Maritime Organization, which is under pressure to follow their lead.
The following is an extract from Drewry’s latest Container Forecaster report, just published.
It is a sign of the times that the sustainability reports of container shipping companies arguably make for more interesting reading than their income statements, which no longer contain such mind-blowing numbers.
Sustainability/ESG filings certainly provide more clues on the long-term direction that carriers are heading, filled as they are with pledges on how each will help the industry go beyond the current decarbonisation target of the International Maritime Organization (IMO) – to at least halve shipping’s greenhouse gas emissions by 2050 (compared to 2008).
Report reveals extent of illegal fees for seafarer recruitment
The extent of illegal recruitment fees and charges being levied on seafarers, in violation of the Maritime Labour Convention, has been revealed in a research report and survey produced by Liverpool John Moores University (LJMU) and leading maritime welfare charity, The Mission to Seafarers (MtS).
The report, titled ‘Survey on Fees and Charges for Seafarer Recruitment or Placement’, shines a light on instances in which seafarers are being forced into paying illegal fees and charges, further confirming the extent of this serious problem and providing a better understanding of how widespread the issue is.
Tankers: West Africa oil trade shifting
The crude and product tanker trades in the West Africa are about to change, after the recent inauguration of the Dangote refinery in Nigeria. In its latest weekly report, shipbroker said that “the long-awaited massive 650kbd Dangote refinery in Nigeria was inaugurated in late May, following years of delays caused by logistical problems and pandemic related disruptions. The refinery is expected to begin operations this summer, although industry experts warn that commisioning is a very complicated process, not least due to the sheer size of the refinery and so is likely to take additional time.