Shipping Market Overview and Outlook

Macro Economics

The main shipping drivers looking healthier in a tricky environment

This recession was caused by a financial crisis, and what we do know about recessions caused by financial crises is that they are followed by very weak recoveries. Why is that? It is because the financial system has been fundamentally damaged ...

There is some optimism surrounding the US economy, but the clear skies are still far away. Because personal consumption expenditures account for 70% of the GDP it is relevant to keep an eye on consumers and see how they are doing.

Dry Bulk Shipping

Lots of newbuildings to come but still not undermining a positive market

On the contracting side, things have been busy. 305 newbuilding contracts have been signed in 5 months adding 25.3 million DWT to the order book. Apart from 20 ships the new orderings have scheduled delivery in 2011 and 2012. Amongst the 20 new contracts for 2013-delivery are 5 new 205,000 DWT ore carriers ordered by the mining giant Rio Tinto. The mining companies have been down this road before and given it up - but it appears that they are giving it another go.

Tanker Shipping

Tankers are doing well for now but the prospect is negative

Oversupply of crude tonnage is expected to weigh heavily on rates for the foreseeable future. However, in the short term, support could come from three factors. Firstly, increasing Somali pirate activity, which has forced many operators to divert cargoes away from the East African Coast and in some cases to re-route around the Cape of Good Hope, increasing shipping times to Europe by 12 days. Secondly, although as yet, the recent oil spill in the Gulf of Mexico has not had an impact on the tanker market, if the spill was to encroach on shipping routes it would likely impede shipping to and from the US Gulf Coast. Finally, the renewed rise in the use of large crude carriers for floating storage could limit their availability, especially on routes from the Middle East Gulf.

Container Shipping

Looking brighter but still too many ships ahead

Indicative for the level of reduced speed is the newly introduced FAL 5 string from Maersk and CMA CGM. 10 vessels of 13,000 TEU each are being deployed on the new Asia-Europe string that under old-"normal" conditions would deploy only 7-8 vessels. This service will be introduced in June prior to the peak season and is bound to affect the utilisation on other FE/Europe string, as it satisfies an annual front-haul demand of 676,000 TEU. This compares to the total front-haul demand of 11.5 million TEU in 2009 and equal a surge in volumes of 5.4% alone to meet the capacity of this string.

Source: BIMCO / maritimedanmark.dk