The Q1 2024 Shipping Market Overview & Outlook from BIMCO has been released which features an analysis of the container shipping market regarding supply and demand.
In regards to container shipping market, BIMCO notes that cargo volumes are expected to grow more slowly than the fleet, at 3-4% in both 2024 and
2025 vs. fleet growth of 9.5% in 2024 and 4.9% in 2025.
However, the ship supply/demand balance is still expected to strengthen in 2024 as Houthi attacks on ships in the Red Sea drive ships to take longer routes via the Cape of Good Hope.
We have assumed that this will impact the market during the first half of 2024, with routings returning to normal via the Suez Canal after that.
…BIMCO stated.
As this temporary increase in demand for ships is not related to cargo volume growth, it follows that ship demand will fall in 2025. The tightening of the supply/demand balance has immediately led to an increase in freight rates, time charter rates and time charter fixture periods.
Supply
The container ship fleet is forecast to grow 9.5% during 2024 and 4.9% during 2025, equal to 14.9% growth over the two years combined. The largest ships with capacities of 12,000 TEU or more, of which there are around 800, will contribute 75% of the total capacity growth as the order book remains large and no recycling is forecast for the segments. At the end of 2025, these ships will contribute more than 40% of total capacity.
Recycling is still estimated at 720,000 TEU for the two years. However, they have reduced the forecast for recycling in 2024 while increasing it for 2025. Due to the attacks in the Red Sea, demand for ships will be higher in 2024 than previously expected and is likely to delay some recycling of ships to 2025.
Deliveries are estimated to hit a new record in 2024, exceeding the one just set in 2023, but slow down slightly in 2025 as the order book is depleted. The Red Sea situation is also impacting average sailing speeds. It mainly impacts main liner ships and the capacity weighted average speed has so far increased 4% compared to last year at the same time.
We assume that the situation will be resolved and that ships will slow down in the second half of the year to end with similar average sailing speed as in 2023. We therefore also estimate that average sailing speed will be lower in 2025, however, should the resolution of the Red Sea crisis be delayed the slowing down of
ships will also be delayed. We therefore forecast that supply will grow on average 9.1% in 2024 but only 4.1% in 2025.
..BIMCO stated.