The Shipping Market Overview & Outlook from BIMCO has been released which features an analysis of the container shipping market regarding supply and demand.
Supply/demand
According to BIMCO, market strength remains predicated on Red Sea reroutings. Ship supply is expected to grow by an average of 10.3% in 2024 and 5.3% in 2025. After increasing in 2024, sailing speeds are projected to reduce in 2025. Rerouting via Cape of Good Hope could impact all of 2024. Ship demand is anticipated to rise by 15.0% in 2024 and decline by 5.0% in 2025 if ships return to the Suez Canal. The supply/demand balance is expected to remain tight throughout 2024. Any weakening could begin in the second half of 2024 and gain momentum if ships return to the Suez Canal.
Demand
According to the IMF, the world economy is projected to grow by 3.2% in 2024 and 2025. Among the world’s five largest economies, only the EU is expected to grow faster than in 2023. Global manufacturing PMI continues to indicate stability, hovering around 50. In China, PMI for new export orders has only exceeded 50 twice in the last 14 months. Retail sales in the US and EU remain stable, with US consumers spending more and saving less than before the pandemic. The expected lowering of interest rates could further stimulate consumer spending. Attacks on ships in the Red Sea have compelled nearly all container ships to sail around the Cape of Good Hope, increasing average sailing distances and ship demand.
Supply
Ship deliveries are set to reach a new record high in 2024, surpassing the previous peak in 2023. The fleet is projected to expand by 15.6% between the end of 2023 and the end of 2025. Recycling rates are expected to remain low in 2024 due to increased demand for ships caused by the Red Sea situation, but are anticipated to rise in 2025. In recent months, congestion has intensified at some transhipment hubs. Failure to renew longshoremen contracts for the US East and Gulf coasts could potentially cause disruptions. The long sailing distances around the Cape of Good Hope have resulted in a slight increase in sailing speeds. BIMCO expects average sailing speed to remain elevated throughout 2024 but to decline in 2025.
