BIMCO SHIPPING MARKET OVERVIEW & OUTLOOK – August 2012 -
Global Economy & Container Shipping
Creating the framework for bringing back the world economy and consumer confidence onto a sustainable path is a political task – without the political responsibility, will and decisiveness, the prospect for a recovery is bleak. As we approach the fourth anniversary of the start of the global financial and economic crisis the outlook continues to be bleak. The V-shaped recovery is now ancient history and the sustainable growth level that we hoped would settle high continue to show a sideways or even descending trend.
So where is the good news to be found? The answer could be: “Everywhere, but in small doses”. Inflation is low almost across the globe and so are interest rates. It has never been cheaper to borrow money …
Many questions are up in the air at present: How quickly can India return to real positive growth? Will Brazil continue the positive development? And how about the development in fuel prices? Lower oil prices are supportive for global growth, even though countries heavily depending on income from oil, like Russia, will probably have a hard time. The situation is rather uncertain, but some elements can swing around and give some positive momentum. The following analysis of the main segments is based on this uncertain situation and will be impacted by any positive change to the current situation.
Freight rates hold on to a healthy level on the main routes, while new large vessels are put to work smoothly without adding extra downside pressure to the current balance.
The positive stories continue to show themselves in the container shipping segment, with freight rates holding up well and demolition activity staying strong. In the light of the slowly developing demand side, it’s very positive that the industry deals with the supply side issues to improve the fundamentals.
The containership fleet has just surpassed the 16 million TEU mark, with 3.6 million TEU left on the orderbook for future delivery. But the growth is luckily diminished due to excessive demolition activity, in particular in the smaller segments.
Regardless of the slow development of demand, freight rates have travelled from a very poor state at the end of 2011 to a comfortable level on several significant trading lanes. Bearing that in mind, BIMCO expects the peak season to become a positive surprise, with rates holding up somewhat but potentially with a sliding tendency if deployed capacity reveals itself as abundant. BIMCO continues to expect the short term focus will be on balancing the demand for new tonnage with deployed capacity.