Blankings and idling have kept freight rates artificially high. But demand for goods will remain depressed this year and any recovery will be slow.
Any recovery in container shipping will come from an extremely low base, BIMCO says.
THERE are no quick fixes to the crisis in container shipping caused by the coronavirus pandemic and the sector should prepare for an extended downturn, according to BIMCO chief shipping analyst Peter Sand.
“We left 2019 looking at 2020 with mixed feelings. For container shipping we expected a repeat of what we already had, but the one thing that has ruined every forecast and projection is the pandemic,” Mr Sand said in a webinar.
“The WTO’s optimistic outlook is for world trade falling by 13% and a rebound by 21% in 2021. Its pessimistic scenario is a 32% drop in 2020. It is highly likely we will see at least the 13% fall in trade.”
Figures for imports of goods into the US, which reported a 4.8% economic contraction for the first quarter, already showed a collapse in consumer confidence.
“American shoppers are not buying clothes, with retail clothing sales down by 50% since February,” aid Mr Sand. “Furnishings and motor vehicle parts are also down by a quarter. These are all key containerised goods so when we see no more buying it will affect the demand from shippers, further impacting the number of loaded containers. The change is likely to be severe and go one way only.”
Loaded containers into the US west coast had already seen a significant contraction, falling by 13% in the first quarter compared to last year.
BIMCO expects no V-shaped recovery “nor any other letter in that game”, but a slow and gradual return to what will become a “new normal”.
“When you look at 2021 growth and see 21%-24% growth, it depends on your base year,” Mr Sand said. “We are staring down the abyss and it is going to be a challenge climbing back.”
Caution was also needed when looking at manufacturing growth figures, he added.
Figures from the Chinese manufacturing purchasing managers index showed the sector had taken a hit in February, followed by those in Europe and the US, but have since shown a sharp increase, but this was deceptive.
“The V that you see now shows only a stabilisation from the month earlier,” Mr Sand said. “A reading of 35 moving to 52 shows we are only now slightly ahead of the lows we saw in February. In order to get back to normal levels we need multiple months of much higher levels.”
While container shipping was “holding up” in terms of freight rates, volumes of containerised exports were likely to remain low.
“Freight rates are being held up artificially, by idling 10% of the fleet,” he said. “Idling is across the board and blank sailings are at record highs.”
There were no quick fixes to the pandemic situation, he added.
“It is still a moving target that we haven’t seen the full extent of. All sectors are likely to see demand contract this year and the overcapacity that we brought into 2020 is only getting bigger.”