BIMCO: Container Shipping Market Strength Predicated on Red Sea Re-Routing

Niels Rasmussen, BIMCO’s Chief Shipping Analyst, reports that ship supply is expected to grow on average 10.3% in 2024 and 5.3% in 2025. After increasing in 2024, sailing speeds are expected to reduce in 2025.

Attacks on ships in the Red Sea have forced nearly all container ships to sail around the Cape of Good Hope, adding 10% to average sailing distances and ship demand.

Re-routing via Cape of Good Hope could impact all of 2024. Ship demand increases an estimated 15.0% in 2024 and falls 5.0% in 2025 if ships return to the Suez Canal.

The long sailing distances around the Cape of Good Hope has led to a slight increase in sailing speeds. “We expect average sailing speed to remain elevated during 2024 but fall in 2025,” says Rasmussen.

The supply/demand balance is expected to remain tight throughout 2024. Weakening could begin during second half of 2024 and will gather speed if ships return to the Suez Canal, says Rasmussen.

According to the IMF, the world economy will grow 3.2% in 2024 and 2025. Of the world’s five largest economies, only the EU will grow faster than in 2023.

Ship deliveries will hit a new record high in 2024, beating the record set in 2023. The fleet is expected to grow 15.6% between end 2023 and end 2025. Recycling is expected to remain low in 2024 as the Red Sea situation increases demand for ships but increase in 2025.