Clarkson Research’s six-monthly outlook for the global shipping markets, Shipping Review & Outlook, has today 30th September 2024 been released by Clarksons Research. The outlook profiles a strong earnings environment across much of shipping, with Clarksons industry wide “barometer”, the cross-sector ClarkSea Index, averaging $25,584/day in 2024 (+10% y-o-y and +35% on the 10-year trend) and with underlying trade volume growth, with disruption to trade patterns amplifying shipping demand, remaining supportive alongside some supply side constraints from low orderbooks in certain sectors and a “tight” shipbuilding market.Summarising the review further, Steve Gordon, Managing Director of Clarksons Research commented:
We now expect seaborne trade volumes to grow by 2.2% and reach 12.6bn tonnes in 2024 (+2% to 12.8bn in 2025). China remains a key driver, importing 400mt more volume than two years ago (supported by inventory building despite mixed domestic economic signals). Geo-politically driven disruption to trade flows continues to materially impact shipping demand (global tonne-mile trade +6% in 2024, highest growth for >15 years). Tonnage transits through the Red Sea are still running 70% below typical levels, with diversions adding an estimated 3% to overall global vessel demand (+12% for container shipping). The re-distribution of energy flows in response to Russian sanctions also continues to add tonne-miles, whilst growth in long-haul Atlantic exports to Asia (e.g. oil, gas, iron ore, other minerals) also supports longer haul trends. Restrictions at the Panama Canal however are now normalising. So, growth, distance and disruption in trade as shipping manages an increasingly complex demand outlook.
Across the shipping segments, container shipping has seen its strongest conditions outside of the Covid-19 period with Red Sea re-routing (now ~700 vessels), improving volumes and some congestion supporting freight and charter rates of x3-4 late 2023 levels. The market has recently softened as the “peak” season unwinds and fleet expansion continues; prospects next year will be tied to the Red Sea situation. Tanker markets have seen further good cashflow (avg earnings >$40,000/day ytd despite seasonal summer softness) with limited fleet growth (particularly crude tonnage), long-haul Russia-related flows and growing oil output in the Americas supportive. A strong winter market is expected, although the OPEC position and Chinese demand need to be watched.
Bulkers have seen an improved 2024 (avg earnings $16,000/day), led by Capesize strength (solid long-haul Atlantic export growth). LPG rates remain “healthy”, if below the record highs of 2023, while LNG rates are softer with more limited trade growth and a pick-up in fleet expansion suggesting more moderate winter spot rates (a major wave of export project start-ups are scheduled from 2025). Offshore oil and gas markets are continuing on a positive trajectory for the moment, with dayrates at record levels. The car carrier market remains exceptionally firm though may have peaked (cooling trade growth, tariff concerns, fleet expansion). Cruise is having a good year, with passengers expected to reach 35m and a returning newbuild program.
On the supply side, the global fleet is continuing to steadily expand, with an increase of ~4% expected in 2024 to 2.5bn dwt (growth is uneven, tanker fleet <1% this year, vs containers 10%, LNG 8%). With over 100m dwt (>$135bn) of orders so far this year, there is strong cross-sector newbuild demand driven by the market position, fleet renewal (world fleet has “aged” ~4 years since 2014) and “green” ship programs. The shipbuilding market is very “tight” (prices are up only +6% ytd but now sit at 2008 peak levels in nominal terms, and lead times are long with yard ‘forward cover’ at 3.5 years). In response, shipyard capacity is now expanding again through reactivation and expansion of facilities principally in China (in CGT terms, China now has an all-time high orderbook and >50% global market share, but the global orderbook is still 35% lower than in 2008). S&P markets are very active (similar sales “run-rate” to 2023) with pricing elevated. Demolition markets have been quiet. The world fleet and orderbook is now valued at excess $2 trillion with ship financiers transacting a steady flow of deals but experiencing strong competition and early re-payments. Capital markets have been generally quiet.
The Green Transition remains a vital but challenging strategic area. We estimate GHG emissions will increase marginally in 2024 and contribute ~2% of global emissions. The regulatory landscape continues to evolve (‘FuelEU Maritime’ limits fuel GHG intensity from 2025, IMO is debating ‘mid-term measures’). Green technology uptake continues with 7% (forecast >20% by 2030) of fleet tonnage now alternative fuel capable along with 52% of orderbook tonnage (LNG dual fuel the leading option this year). Retrofitting is also playing an important role (~34% of fleet tonnage is fitted with ESTs) along with slower speeds. Energy Transition will impact the industry’s cargo base in the long term (i.e. strong potential in gases) and support growth in offshore wind.
Shipping today remains highly cash generative while managing material disruption, an increasingly complex trade outlook and the growing need to make “tricky” fleet renewal and green ship investments.
Shipping Intelligence Network (SIN) is Clarkson Research’s market leading digital platform and the most comprehensive source of data on shipping and trade. The system provides immediate access to uniquely powerful data and analysis tracking and projecting market supply / demand, freight, vessel earnings, vessel values and macro-economic data around trade flows and global economic developments.
Source: Clarksons Research
