Shipping Overview and Outlook of the First Quarter of 2023

The Baltic and International Maritime Council (BIMCO), released the shipping overview & outlook for the first quarter (Q1) of 2023. According to its Chief Shipping Analyst, Niels Rasmussen, for the container market, the demand will recover from the second half of 2023 but supply grows significantly faster. The tank market, meanwhile, is believed to create the strongest market in 15 years. As per the bulk market, it is expected that the market will go the way China does.

Image by Pexels from Pixabay

Though demand recovery might be months away, global buyers and product suppliers like you may grasp the opportunities to arrange product shipment to lower the costs.

Highlights of BIMCO First Quarter Overview & Outlook

● For the container market:

The supply/demand balance is weakening, with downsides outraging the upsides. Pressures are still in freight rates, time charter rates, and second-ship values now till 2024. It is expected that head-haul and regional trade demand will have negative year-on-year growth in the first half of 2023 while returning to growth in the second, with a total growth of 1-2% in 2023 and 5-6% in 2024. 

● For the tanker market: 

Demand will grow faster than supply in both 2023 and 2024. Freight rates, time charter rates, and second-ship values will be growing throughout the two years. Fleet growth is limited by very small orders, with a reduction in overall supply as sailing speeds are predicted to decrease by 2-3% due to decarbonization regulations.

● For the bulk market: 

Driven by China’s economic recovery, the demand growth will be within 1.5-2.5% in 2023 while weakening to 1-2% in 2024 due to a reduction in coal shipments. Improvements in consumer sentiment should help solve China’s real estate crisis and boost bulk demand, whereas the import demand would fall as India and China continue to boost domestic mining and Europe transitions away from fossil fuels.

3 Big Features in Container Ships Chartering

According to FreightWaves, despite the drop in cargo demand, container lines are still chartering ships, with the following most important 3 features.

First, midsize and smaller ships are more focused. As almost all of the larger vessels were put onto multi-year charters during the boom, midsize and smaller ship categories are more used in the charter activity, with vessels capacity of around 10,000 twenty-foot equivalent units or lower.

Second, charter duration has reduced sharply. Among charters by top liner, several companies started a shorter charter duration this month, as reported by brokerage Braemar. Global Ship Lease (GSL) has placed four of its ships on charters since October at an average duration of 10 months. 

Third, risks for larger ship lessors are higher. Both MPC (MPC Container Ships) and GSL insisted the orderbook and potential impact on ship lessors are more weighted, and that medium and smaller ship lessors should be able to escape the significant capacity hit. 

Image by Christo Anestev from Piaxabay

Global Trade Demand Rebound Coming in Months

Empty container ships are reported to be clustered around near China, where ship owners anticipate the demand to rebound the fastest. 

According to Drewry, 4.1% of the world's container fleet, which can hold 1.067 million 20-foot container boxes, was empty in February. Spot container freight rates have dropped to their lowest levels in 2.5 years. 

CEO of Mediterranean Shipping Company (MSC, the world’s largest container line), Soren Toft, told CNBC earlier this month, that he still sees the U.S. in very positive shape, as inflation is to reduce and the job market is rather strong. Seeing good healthy volumes out of China to North Europe, he hoped and believed that’s a sign of consumer demand, and also a trend for the coming months. 


Image by studiogstocka on Freepik

What Business Opportunities to Grasp

The current situation may be bad for the shipping industry, but it can be favorable for global buyers. With the continuous decline in freight rates and containers easier to get, if you are a global buyer, it may be a good idea for you to arrange your shipment before the market gets further recovery. For product suppliers, it is recommended to take advantage of the period to push an order from your clients. Of course, your value-added services such as cost optimization for your clients and pre-shipping calculation to help clients minimize extra costs are always a more effective and sincere way to go.

Source: 1. Safety4sea 2. FreightWaves 3. Bloomberg 4. CNBC

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