Clearly 2019 has been a challenging year for shipping and in its latest analysis international shipping association BIMCO highlights various “worrying trends” in container shipping.
In review of 2019, one of the “most worrying trends” to affect shipping overall is the falling trade-to-GDP ratio, according to BIMCO”s analysis.
Unsurprisingly, this, BIMCO says, is down to trade barriers being spear headed by the US and slowing globalization.
Specifically focusing on container shipping BIMCO highlights the decline of imports into US West Coast Ports, outlining this to be the first year of decline since 2019.
While further tariffs have been narrowly avoided in December 2019, BIMCO does not expect any frontloading boost to come in 2020. It is likely that ongoing trade disputes will drag volumes as well as freight rates down.
Intra-Asian volumes have remained flat in 2019 compared to 2018. This, BIMCO says, is a “worrying trend” because as without volume growth here, volumes on the longer haul routes out of Asia are unlikely to grow.
In addition, container shipping demand grew by just 1% globally in the first nine months of 2019. At the same time, the global fleet grew by 3.7% setting the supply and demand situation to be “off-balance”.
Cascading continues to be a trend where the deliveries of ultra large container ships (ULCS) send relatively smaller ships into other routes. BIMCO points out however that these small ships are not necessarily that small with some having capacities of 10,000 TEU.
These ships “will enter trades where there is no appetite for them, adding further pressure to freight rates and bottom lines”.
Healthier levels of the trade multiplier could be returned to if protectionist measures are rolled back and free trade can develop at a natural pace, according to BIMCO.
“Although the trade tensions are at the moment being led by the current US White House, they would not necessarily be turned around should the presidency change hands in November .”