Container transport demand forecast reduced

Container demand

According to WMN and maritime transport analyst Drewry, amid a gloomy global economic outlook and rising  commercial trade tensions, the forecast for container demand transport will be reduced in the next five years.

Previously, the forecasted index of supply and demand was forecasted to gradually increase until 2022, upt o that point, the container industry would reach an equilibrium. Nonetheless, new forecasts suggest that the industry now faces the current oversupply situation for several more years.

“The anticipated rebalancing of the container market seems to have been postponed, which is more bad news for carriers that face substantial increases in costs as a result of the stricter 2020 fuel standards,” said Simon Heaney, senior container research manager at Drewry.

The container market demand which oscillates quarterly, reached a maximum in the first quarter to the minimum at the second. Contrary, in the third quarter the demand stabilized, but at this stage, it is unknown how much was stimulated by the last round of tariffs issued by the United States and China, or how it will impact the fourth quarter to reduce expedited charges.

According to Drewry, the impact assessment of the last round of US tariffs imposed last month indicates that trans-Pacific flows to the east could be affected at an opportunity cost of about 1 million TEU next year.

On the supply side, deliveries of new ships stand over the forecasts, altogether with less demolitions in the second quarter, led Drewry to marginally increase the forecast of the fleet’s growth rate for this year.

Finally, Drewry’s perspective on freight rates and carrier profitability in 2018 and 2019 changes little from previous estimates, despite the downward revision of commercial forecasts and the narrower outlook for ship supply. If the market remains fiercely competitive, there are indications that some aspects of predatory pricing practices are receding and that the deployment of containerized transport vessels is more reliable.

Source World Maritime News

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