A five-year high in seaborne trade growth coupled with easing oversupply is creating the building blocks for a recovery in the global shipping markets, says Clarkson Research Services managing director Steve Gordon.
The cross-sector ClarkSea Index has climbed by 8% year-on-year — but earnings in the industry remain below the trend seen since the global financial crisis.
“Overall, the shipping markets have started to see some improvements and a reduction in surplus capacity, supported by more positive demand trends and more moderate supply growth,” Gordon said.
“Challenges clearly remain, with some sectors still under stress, but building blocks for further recovery do seem to be being put into place.”
Progress in the dry cargo and containership markets has led the overall upturn during a year that has seen the global economy improve at a faster rate than anticipated, Gordon explains.
Writing in the brokerage’s latest Shipping Review & Outlook, he says with China pushing ahead of expectations, the world economy is forecast to grow by 3.5% in 2017. This is ahead of the 3.2% growth seen last year, with further progress projected in 2018.
This has translated into stronger seaborne trade, with Gordon and his colleagues forecasting it to reach 11.5 billion tons in 2017. This is an “encouraging” growth rate of 3.7% — or 4.1% in terms of ton miles — the fastest seen since 2012, he says.
The progress has not been uniform across the markets: Clarksons charts container trade growth of 5.1% in 2017, a three-year high, while oil trade growth has slowed from 4.2% in 2016 to about 2% this year.
Against the generally improving picture, newbuilding activity has risen by 69% from last year's 30-year low. However, Gordon adds, this year is still on course to be the second-lowest in terms of fresh orders since 2001.
Just 108 shipyards have secured contracts in 2017 to date, some way from the more than 600 that inked in new vessels in 2008, the report says. As a result, the global orderbook has reduced by 45% in the past two years. Gordon counts 182 million dwt of ships on order today — worth about $170bn — which he says is a “manageable” 9.5% of the global fleet.
“Delays and ‘non-delivery’ are still prevalent but yard output is expected to remain steady in 2017, before falling 26% in 2018 to 75 million dwt,” the researcher said.
With improved conditions in the dry and container markets, demolition activity has slowed. In all, 23.9 million deadweight has been recycled this year, following 44.6 million in 2016, Gordon adds.
As a result, the world fleet, now at 1.9 billion deadweight, will grow by 3.5% this year, before slowing to 2.4% in 2018, Clarksons believes.
Gordon concluded: “Shipyard capacity, trade developments and finance availability will remain key issues to monitor as the shipping markets start to move into the next part of the cycle.”
