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Ongoing disruptions in one of the world’s top shipping lines will remain the key demand driver in the container shipping market this year, according to BIMCO’s latest Container Shipping Market Overview & Outlook
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Much uncertainty remains as it is not known when ships can return to the Red Sea
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Cargo volumes are expected to grow 4% to 5% in 2024 and 3% to 4% in 2025
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Ship supply is seen to rise by 10.3% on average this year and 6.3% next year
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Ship demand will increase by 15.5% in 2024 and drop by 5.5% in 2025 “if ships return to the Suez Canal”
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Deliveries of ships are expected to reach a new record high this year, topping the record set last year
Ongoing disruptions in the Red Sea will remain the key demand driver in the container shipping market this year, based on BIMCO’s Container Shipping Market Overview & Outlook September 2024.
Based on its supply and demand projections, “the supply/demand balance will be stronger in 2024 than in 2023.” Still, much uncertainty remains as it is not known when ships can return to the Red Sea.
Ship supply is seen to rise by 10.3% on average this year and 6.3% next year. Ship demand, on the other hand, will increase by 15.5% in 2024 and drop by 5.5% in 2025 “if ships return to the Suez Canal.”
BIMCO cited the International Monetary Fund, which expects the world economy to grow 3.2% and 3.3% in 2024 and 2025, respectively. Of the world’s five largest economies, however, only the EU is expected to grow faster compared to 2023.
The publication, released last month, says global manufacturing PMI (purchasing managers’ index) remains stable at around 50, but with China’s PMI for new export orders slipping below 50 in the last four months.
US retail sales are slightly down, while up slightly in the EU. Consumers in the latter are reporting higher confidence, even as it slips downward in the former.
As for disruption in the Red Sea, this is due to attacks by Houthi rebels, which has forced up to 90% of container ships to sail around the Cape of Good Hope resulting in a 10% increase in average sailing distances and ship demand.
Deliveries of ships are expected to reach a new record high this year, topping the record set last year. The global fleet is seen to grow 14.5% between end 2023 and end 2025.
Container Shipping Market Overview & Outlook says congestion is not a problem despite the global disruptions which should affect efficiency of ports. Luckily, the threatened strike by longshoremen which would have crippled the US East and Gulf Coast was settled almost immediately, thereby avoiding another new disruption.
“The long sailing distances around the Cape of Good Hope have led to a slight increase in sailing speeds,” says the publication, adding that “we expect average sailing speeds to remain elevated during 2024 but fall in 2025.”
The growth forecast for 2024 is only slightly lower than the 3.3% growth achieved in 2023, while regional growth forecasts are also in line with 2023. Despite only a small uptick in the global growth forecast, 2025 is expected to reveal larger shifts in regional growth patterns.
Said the publication: “We forecast that cargo volumes will grow 4% to 5% in 2024 and 3% to 4% in 2025.”
From January to June, 2024, cargo volumes into North America from East and Southeast Asia grew particularly fast at 14.7% year-on-year. Among the reasons for this was the “relatively weak first half of 2023 and partly because of peak season cargoes being shipped earlier than normal,” according to the Container Shipping Market Overview & Outlook.
As an added damper, it said that second half volumes “will suffer.” Cited were spot freight rates from Shanghai to the US dropping by more than 30% between early July and mid-September
As a backgrounder, in the 2010s before the COVID-19 pandemic, the spot freight rate dropped by a maximum of 10% during the same period, but regularly saw a slight hike in rates.
BIMCO is the world’s largest global shipping association with more than 2,000 members in over 130 countries.
