Marine Link
Friday, December 20, 2024

BIMCO: Container Shipping Faces Low Supply Growth

Maritime Activity Reports, Inc.

January 25, 2016

CSCL Globe on sea trials. (Photo: Hyundai Heavy Industries)

CSCL Globe on sea trials. (Photo: Hyundai Heavy Industries)

While the containershipping market continues to welcome a fleet of modern, mammoth efficient ships to the fold, it will struggle in 2016 with low supply growth that will test its mettle, according to a recent analysis from BIMCO.

Overall, container volumes being moved around the world have grown by an average GDP-to-trade multiplier of just 1.1 since 2010 and we expect this to continue in coming years. With IMF expecting GDP growth of 3.4% in 2016, this translates into container demand of 3.5-4%. The “new normal” level of demand is somewhat lower than originally expected – just as global GDP growth keeps disappointing us. From 2000-2008, the GDP-to-trade multiplier stood at 2.2, delivering container demand growth at 8-9% from a GDP base of 4% on average.
 
Freight rates across the board saw lower levels more or less all year, with trading into the US East Coast in the first four months of 2015 being the exception.
 
Supply
There is no way to hide it, nor any reason to. The fundamental imbalance of the containers shipping market worsened in 2015. While the demand side delivered only a sluggish growth level, the supply side jumped by an astonishing 8.1%. We are not making it easy for ourselves.
No wonder the system of cascading broke down, as all trades were already awash with ships ready to be filled up with cargo but still sailing underutilised. 2015 saw the injection of 208 brand new ships with a combined transport capacity of 1.67 million TEU. 
 
Outlook
The lower bunker costs are very welcome to an industry struggling to make a profit. The lower fuel price, however, may not be such a blessing, as some may have forgotten that slow-steaming originally was a way to deploy more ships without increasing capacity on the strings.
As we have seen, even in the tramp shipping segments, speed has gone up now that the fuel is much cheaper. By mid-January 2016 HFO 380 cSt was quoted at USD 112 per tons in Rotterdam and USD 152 per tons in Singapore (Marine Bunker Exchange). This compares to USD 242 and 281 respectively one year ago. A drop in prices of 50%.
www.BIMCO.org
 

Subscribe for
Maritime Reporter E-News

Maritime Reporter E-News is the maritime industry's largest circulation and most authoritative ENews Service, delivered to your Email five times per week