BIMCO has 'low expectations' of world shipping demand growth

BIMCO (Baltic and International Maritime Council) has 'low expectations for demand growth in 2019' for the container shipping worldwide, reports American Shipper

18 June 2019 - 19:00

BIMCO (Baltic and International Maritime Council) has 'low expectations for demand growth in 2019' for the container shipping worldwide, reports American Shipper.

Peter Sand, the chief shipping analyst at the Copenhagen-based shipowner and ship manager group, said he takes a protectionist's approach to global trade.

While US buyers increased their imports in the last months of 2018 to avoid threatened tariffs, imports fell in the first two months of 2019 as inventories were full due to the frontloading, he said.

'The inventory-sales ratio increased to 1.47 in December 2018 from 1.43 in November and grew to 1.48 in February. This rising ratio indicates that inventories are growing faster than sales, reducing import prospects for containerised goods on the transpacific trade lane,' Mr Sand said.

The peak season for container shipping is July to September for the Far East to Europe and North America trade lanes, said Mr Sand, and 'to get an early indication of how well the peak season on the long hauls in 2019 will perform, we watch the intra-Asian trades closely.'

He said BIMCO has 'started to see some weakness. This is the downside risk for which we are watching out.

'Intra-Asian volumes tend to peak before the long-haul volumes do, as many of the semi-finished goods are in transit to final production stages just before the peak export season out of Asia starts in July,' he said.

Global container volumes in the first quarter of 2019 were just 91,000 TEU higher than they were in the same 2018 period, said Mr Sand, and that 0.5 per cent growth is 'massively below those of earlier years, where the global demand in Q1 2017 grew by 6.6 per cent and in Q1 2018 by 3.6 per cent.'

The low rate of growth 'is a critical issue for an industry used to much higher growth - double digits for many of the years between 1999 and 2007, growing by an average of 10.2 per cent, and coming down to an average of 4.3 per cent between 2012 and 2018,' he added.

'Fewer export orders mean less transport of semi-finished goods between the Asian countries. So, the freight rates on intra-Asian routes going from Shanghai to Japan, Korea and Singapore are increasingly relevant to keep an eye on, to spot the knock-on effect on the regional semi-finished goods market - and they are mostly moving sideways or slowly in decline.'

Mr Sand said 53 containerships have been ordered in 2019, with 14 having a capacity of between 11,000 and 15,000 TEU and 39 with cargo capacity between 653 and 2,500 TEU.

'Our forecast is now for the fleet to grow by 3.1 per cent in 2019,' said 'This would be the second-lowest fleet growth on record.

'At the beginning of the year, BIMCO expected a small amount of capacity to be demolished. That amount is now predicted to double - to 200,000 TEU - on the back of much weaker than expected freight rates across the board for the year so far,' he said.


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