BIMCO, the international shipping association representing shipowners, has reported that it expects the container shipping segment to see a net fleet growth of around 4.1% in 2018 and that “profitability is up for grabs” this year.
The positive news was, however, followed by a warning, as BIMCO said that the growth would only take hold if demand kept at 4-5% and actual fleet growth was “handled with care”.
In an announcement, BIMCO said that 2017 was a better year for container shipping compared to 2016 as freight rates went up, their volatility was reduced, demolitions went down and the idle fleet was “generally reactivated”.
The association found that the 2017 demand growth rate is heading for +5%, which is the highest in six years.
Alphaliner has also reported that, after a terrible 2015, port throughput has grown as much as 7.7% quarter-on-quarter in Q3-2017.
Angus Frew, BIMCO CEO & Secretary General, has explained what the most important agenda is for the shipping community in 2018:
BIMCO stated: “As demand rebounded, combined with a multi-year low fleet growth rate in 2016, the fundamental market balance improved.
“In 2017 we have not seen such an improvement. The fundamental balance seems almost unchanged, as reactivation of idled ships lifted actual fleet growth beyond the nominal TEU growth rate of 3.3%.”
In September, the ordering drought ended.
Twenty new orders for 22,000 TEU ships, due in 2019-2020, broke a 21-month lull in newbuild activity.
BIMCO’s Chief Shipping Analyst Peter Sand has provided his insight into BIMCO’s perspective on the shipping industry in 2018:
Sand has provided a detailed view of the future of the industry in 'The Shipping Market Looking Forward' technical paper
BIMCO commented: “This means that the nominal fleet growth level for the container shipping industry over the next few years is set for around 4%, which leaves little room for fundamental market balance improvements.
“As a result, increased earnings must come from: continued cost-cutting exercises and permanent slow-steaming to keep fuel costs on a tight leash. On top of that: operational efficiency gains and positive demand growth gain more boxes on the individual ships.
“The latter means harvesting some of the economies of scale the industry relies heavily upon – with the large volumes coming from front-haul trades.”