While 2018 was a disappointing year for container carriers, next year could be even worse, BIMCO warns. The source of the downturn will be stalling trade and overcapacity.
Large pools of idle ships and ongoing deliveries of ultra-large tonnage threatens to rattle box shipping’s outlook for 2019
NEWBUILDING TONNAGE THREATENS TO UPSET BOX SHIPPING'S SUPPLY AND DEMAND BALANCE.
FLEET growth will take the centre stage in next year’s container shipping fundamentals, according to BIMCO.
“If only judged by newbuildings, [fleet growth is] clearly positive,” it said in a report. “But remember, 700,000 teu are idle in today’s market. If the lion’s share of that is reactivated — which it will be as soon freight rates just go up slightly — expectations may be reversed.
“Our hopes for a rise in demand are muted by the ongoing trade war and the GDP growth of the advanced economies.”
The development of the fleet during 2018 was a “disappointment”, the international shipping association added.
“After two busy years, demolition interest evaporated completely in 2018 hitting a 10-year low,” it said. “This caused fleet growth to rise higher than demand. The continued inflow of very large containerships onto the Far East to Europe trade lane meant cascading making a return to the stage.”
In 2019, volume growth on long-distance trades would be more critical than ever, given that fleet growth was focused on vessels designed for the deepsea trades.
“Intra-Asian trades, where most containers of any other place are moved, will also suffer if the front-haul, transpacific cargo flow stays dented because of tariff walls on either side of the Pacific,” said the report.
And despite transpacific spot rates hitting five-year highs in October, 2018 as a whole a “turned out to be a be a disappointment”, punctuated only by a few “shiny moments”.
“It was most impressive to watch inbound loaded container imports on the US east coast grow by +8% on top of the 10.1% growth experienced in 2017,” BIMCO said. “On the US west coast, volumes did not impress.”