The September’s 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, disruption remains the key demand driver. Ship supply is expected to grow on average 10.3% in 2024 and 6.3% in 2025. After increasing in 2024, sailing speeds are anticipated to reduce in 2025. Furthermore, rerouting via the Cape of Good Hope is expected to impact all of 2024. We forecast that ship demand will increase by 15.5% in 2024 but fall by 5.5% in 2025 if ships return to the Suez Canal.
In addition, on average, the supply/demand balance will be stronger in 2024 than in 2023. However, weakening during the second half of 2024 has begun and will gather speed if ships return to the Suez Canal. Notably, significant uncertainty remains as it is unknown when ships can return to the Red Sea. If they cannot return during 2025, the supply/demand situation will be stronger than in our base scenario.
Demand
Shifting our focus to broader economic indicators, according to the IMF, the world economy will grow 3.2% and 3.3% in 2024 and 2025 respectively. Among the world’s five largest economies, only the EU is projected to grow faster than in 2023. Moreover, global manufacturing PMI continues to indicate stability as it hovers around 50. In China, however, PMI for new export orders has dipped below 50 during the past four months. Retail sales in the US are down slightly, while there is a slight increase in the EU. Interestingly, EU consumers are reporting higher confidence, while US consumers’ confidence has slipped backwards.
Moreover, attacks on ships in the Red Sea have forced 90-90% of container ships to sail around the Cape of Good Hope, adding 10% to average sailing distances and ship demand.
Supply
Disruption remains the key demand driver
Our Container Shipping Market Overview & Outlook is available now.
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— BIMCO (@BIMCONews) September 26, 2024
Turning to supply, ship deliveries will hit a new record high in 2024, beating the record set in 2023. The fleet is expected to grow by 14.5% between the end of 2023 and the end of 2025. Conversely, recycling is expected to remain low in 2024 as the Red Sea situation increases demand for ships. However, recycling could increase in 2025, reflecting a potential shift in dynamics.
Furthermore, congestion remains low in most ports, although failure to renew the longshoremen contract for the US East and Gulf Coast could cause disruptions. Additionally, the long sailing distances around the Cape of Good Hope have led to a slight increase in sailing speeds. As a result, we expect average sailing speed to remain elevated during 2024 but fall in 2025.
