BIMCO’s and Fitch Ratings’ deteriorating sector outlook for global shipping mainly reflects significantly weaker earnings in the container segment due to the normalization of freight rates, while the outlook in the tanker, LNG and Dry bulks are more stable, say the analysis firms.
In the LNG sector, we see an increase during the cold months in the northern hemisphere due to the demand for natural gas transportation to supply the European markets affected by the change in restrictive policies for gas from Russia.
According to Fitch Ratings, container freight rates fell as supply chain pressures eased, meaning container shipping operators’ profits will be much weaker in 2023 than they have been in the past three years. According to BIMCO, shipping lines have secured massive profits in 2021 and 2022, but are now facing reduced demand for transportation. As for the main risks for the segment, the analyst includes a possible tougher-than-expected recession and the continuation of pandemic-related lockdowns in China, leading to further weakness in demand and manufacturing of finished goods. . Although not likely, any port capacity constraints in China beyond lockdown-related production limitations could be a positive for container freight rates.
The market analysis firm reports that growth in demand for oil tankers in 2023 is expected to be similar to that of 2022, and this segment has stronger prospects than others in the sector. However, transportation measured in ton-miles will increase due to increased oil exports shipped from Russia to China and India, which previously supplied Europe.
It also mentions that dry bulk volumes are likely to remain flat as the key factors affecting demand will remain in place through 2023, despite some moderation in their intensity.
On the other hand, they report that the demand for iron ore volumes will be affected by lower steel production in China due to the continuous closures and the weakness of the real estate market. Coal shipping is affected by restricted imports from Russia to Europe, and despite longer alternate routes leading to higher ton-miles, increased land coal imports to China offset this benefit. Demand for cereals is affected by high prices and disruptions in trade flows from the Black Sea.
New shipbuilding for both bulk carriers and tankers remains at record lows, close to 7% for bulk carriers and 4% for tankers of their fleets of vessels.
We invite you to check the ‘Global Shipping Outlook 2023’ published by Fitch Ratings in the follwing link www.fitchratings.com