BIMCO has released its Container Shipping Market Overview & Outlook December 2024, providing a comprehensive analysis of the supply and demand dynamics shaping the industry.
Supply/demand balance
According to BIMCO, despite the fastest growth in supply and fleet expansion since 2010, the supply/demand balance tightened in 2024. Ship demand has increased as 90% of the capacity that normally transits the Suez Canal has instead been sailing via the Cape of Good Hope, significantly increasing both average sailing distance and ship demand.
However, fleet expansion remains a concern once ships can return to normal routings. BIMCO estimates that fleet growth will increase supply in 2026 by 46% compared to 2019, before the contracting boom began, while cargo volumes are forecast to increase ship demand by 22% between 2019 and 2026.
Even though average sailing speeds are expected to continue declining, reducing supply, growth forecasts indicate the supply/demand balance will still be weaker than in 2019 once ships return to normal Suez Canal routings—a year when freight rates were much lower than recent levels.
BIMCO has changed its assumption for when ships will return to normal Suez Canal routings. It is now assumed that reroutings will impact all of 2025, with a return to normal expected throughout 2026. As a result, BIMCO forecasts a slight weakening of the supply/demand balance in 2025, followed by significant weakening in 2026 as ship demand is expected to fall. Alternatively, if ships return to the Suez Canal in 2025, a significant weakening of market conditions is expected, followed by slight improvement in 2026. Conversely, if reroutings extend into 2026, a slight weakening in 2025 would be followed by a slight tightening in 2026.
Cargo volumes, which experienced very weak growth in 2023, are expected to grow 5.5-6.5% in 2024, with forecasts of 3-4% in 2025 and 3.5-4.5% in 2026. Import volumes into South & West Asia and South & Central America are forecast to grow the fastest. The International Monetary Fund (IMF) projects faster economic growth for many oil-exporting countries in West Asia, likely boosting volumes in the region. In South America, Argentina’s emergence from recession is expected to drive higher volumes.
Spot freight rates for Shanghai exports (SCFI) and average freight rates for Chinese exports (CCFI) have so far averaged 148% and 64% higher, respectively, than last year. Rates rose from April to July but declined from July to October as supply grew and markets exited the peak season. Since October, rates have been mostly stable, with increases to Europe & the Mediterranean offsetting declines to North America.
Supply/demand development forecasts indicate that freight rates may fall slightly from current levels in 2025 but decline more significantly in 2026. Year-to-date, time charter rates have been 52% higher than in 2023. Despite falling freight rates, time charter rates have remained stable, and average fixture periods have increased from eight months at the start of the year to 24 months. Longer fixture periods will reduce time charter tonnage availability in 2025, supporting rates throughout the year. However, in 2026, a weakening supply/demand balance is expected to impact time charter rates.
Prices for five-year-old ships have climbed alongside time charter rates, nearing 80% of newbuilding prices after falling below 70% at the start of 2024. While price increases for newbuildings appear to be stabilizing, shipowners’ continued ordering of new container ships and increased tanker contracting have lifted the order book and prices. BIMCO anticipates nearing the peak of newbuilding prices but acknowledges that surprises—such as a surge in bulk carrier contracting—could alter this outlook. Second-hand prices are expected to remain stable in 2025 but decline in 2026, aligning with time charter market trends.
Uncertainties and risks
Uncertainties in the forecast stem primarily from the European Union (EU) and the US. President-elect Trump has threatened increased import tariffs once in office in January 2025. Significant tariff increases could raise consumer costs, reduce import volumes, and, if met with retaliation, harm global trade and economic growth.
In the EU, households have amassed savings faster than pre-COVID rates, but unlike in the US, these savings have not led to increased consumption. Falling inflation and interest rates could encourage higher household spending, driving import volumes higher than forecast.
