This will lead to a brighter supply-demand index forecast for carriers through 2022, despite the fact that the index is still expected to remain below the important 100 marker.
Ultimately, we believe that these adjustments on the supply side will be sufficient to cushion the blow from slowing demand growth and will contribute to better freight rates and profits
Mr. Heaney mentioned.
Moreover, weaker global macro-economic drivers contributed to a downgrade to Drewry’s port throughput forecast for 2019 to about 4%, but that softening trend should be addressed by changes made on the supply side to balance the market. Changes to the containership orderbook since the last Container Forecaster show that deliveries have been spread more widely than before with more original 2018-19 newbuilds being pushed out to 2020. Additionally, Drewry said that the net addition to the fleet is expected to be only half that of 2018, with the fleet increasing by only 2.5%.
Furthermore, actions regarding the supply side of the 2020 low-sulphur fuel regulation could limit capacity, at least temporarily. Currently, a growing tendency towards scrubbers could see take many ships out of service for a long time. Meanwhile, Drewry expects ship-owners to idle and eventually scrap more older and uneconomic ships before the 1 January 2020. Another important fact is that the use of slow steaming will also help to absorb new capacity and reduce the often negative influence of the cascade on the supply-demand balance.
Last year was one of the most unpredictable the container shipping industry has faced, and this year is likely to be similarly volatile with question marks still hanging over the US-China trade war and new fuel regulations. However, despite being dogged by uncertainty, Drewry is predicting another solid year for the market
Simon Heaney concluded.