Home » Breaking News, Maritime » Shipping outlook positive but not risk-free—report

Most shipping markets including container shipping are forecast a positive outlook for 2018, but the complex and nuanced trading conditions ahead can quickly derail the recovery, according to research and consultancy firm Maritime Strategies International (MSI).

MSI director Adam Kent noted that the compound annual growth rate for seaborne cargo showed improvement almost across the board between 2013 and 2017 and will be equaled or surpassed over the next four years for all sectors, except crude oil and LPG.

However the improvements come with caveats, including more complex and diverse trade routes, shifting bilateral relationships, and national policies that will impact front and backhaul business, said the report.

“To illustrate the changes taking place, we used our proprietary models to rank significant bilateral trades by rate of growth in the last five years and the next five. Many of the fastest growing trades are on routes which did not see significant growth over the last five years,” explained Kent.

“Across all shipping sectors China remains critical to the demand side equation over the next five years but politics and policy are likely to play an increasing role,” he added.

Thanks to lower-than-expected deliveries and robust scrapping, MSI predicts fleet growth levels close to or less than 2.5% over the next two to four years, providing good news for market balances and enabling shipyards to continue to manage underutilized capacity with deliveries outpacing new contracting.

“In terms of the earnings outlook a snapshot of the MSI forecast shows almost all vessel types at the bottom of the trough moving up, with LNG carriers in particular leaping ahead in recent months,” added Kent.

“But how owners will view prospects for 2018 depends very much on timing. An assessment of break-even levels when comparing a five year old vessel bought in 2012 or a 10 year one old bought last year show that the better result was to be patient.”

Earnings for bulkers and container ships will show marginal increases on an annual average basis this year, with sustained better rates on containers post-2018. This generally rosy outlook comes with a warning, which is that for the recovery to continue the brakes need to stay on new vessel contracting, said MSI.

“The current wave of optimism evident in the shipping markets appears justified, but this outlook is not without risks. A rush to over-ordering could jeopardise the recovery within a couple of years and geopolitical factors will certainly play a part,” concluded Kent.

Photo: Biberbaer

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