THE container shipping industry is set to return to negative margins with forecasts of weak demand growth in the coming quarters, says Paris research house Alphaliner.
The number of boxes being shipped around the globe by sea grew 0.5 per cent - 191,000 TEU - in the first quarter of 2019 compared with the same period in 2018. The growth figure is much below that of earlier years, where the global demand in Q1 2017 grew 6.6 per cent and in Q1 2018 by 3.6 per cent.
However, the positive developments should be seen against a drop of 189,000 TEU (-10.1 per cent) into the Indian sub-continent and the Middle East, and 87,000 TEU (-9.9 per cent) into South and Central America from the Far East.
Volumes on the intra-Asian trades fell during Q1 (-0.2 per cent). The drop is a sign of weakening volumes in the supply chains and, ultimately, the result of fewer new export orders received by Asian manufactures in recent months - something that will impact outbound volumes in the coming months.
Within fleet news, of the 53 ships that have been ordered year to date, 14 have a capacity between 11,000 TEU and 15,000 TEU, and 39 have a cargo capacity between 653 TEU and 2,500 TEU.
The active fleet grew by 1.1 per cent during the first four months of 2019, if measured by capacity, reports Hellenic Shipping News.
The average capacity of a demolished ship in 2019 is 2,179 TEU per ship, up from 1,790 TEU in 2018, highlighting the bad start to the year for the sector.
The forecast is now for the fleet to grow 3.1 per cent in 2019. 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.
Only smaller ships will leave the fleet, as the larger ships are still comparatively new. Even though the market may stay unprofitable, sentiment, more than freight rates, has improved enough to disincentivise owners from scrapping; even a sluggish demand outlook will not cause massive scrapping.
Recently, the idle fleet has come down rather sharply. According to Alphaliner, the capacity of the idle ships amounted to 292,943 TEU on 29 April - down from 908,479 TEU on March 4.
Overall, BIMCO has low expectations for demand growth in 2019. A protectionist's approach to global trade and a high sales-to-inventory ratio in the US set limits for how strong peak-season import will be.
As BIMCO forecasts weak demand growth for the coming quarters, the container shipping industry is set to return to negative margins.
WORLD SHIPPING
The number of boxes being shipped around the globe by sea grew 0.5 per cent - 191,000 TEU - in the first quarter of 2019 compared with the same period in 2018. The growth figure is much below that of earlier years, where the global demand in Q1 2017 grew 6.6 per cent and in Q1 2018 by 3.6 per cent.
However, the positive developments should be seen against a drop of 189,000 TEU (-10.1 per cent) into the Indian sub-continent and the Middle East, and 87,000 TEU (-9.9 per cent) into South and Central America from the Far East.
Volumes on the intra-Asian trades fell during Q1 (-0.2 per cent). The drop is a sign of weakening volumes in the supply chains and, ultimately, the result of fewer new export orders received by Asian manufactures in recent months - something that will impact outbound volumes in the coming months.
Within fleet news, of the 53 ships that have been ordered year to date, 14 have a capacity between 11,000 TEU and 15,000 TEU, and 39 have a cargo capacity between 653 TEU and 2,500 TEU.
The active fleet grew by 1.1 per cent during the first four months of 2019, if measured by capacity, reports Hellenic Shipping News.
The average capacity of a demolished ship in 2019 is 2,179 TEU per ship, up from 1,790 TEU in 2018, highlighting the bad start to the year for the sector.
The forecast is now for the fleet to grow 3.1 per cent in 2019. 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.
Only smaller ships will leave the fleet, as the larger ships are still comparatively new. Even though the market may stay unprofitable, sentiment, more than freight rates, has improved enough to disincentivise owners from scrapping; even a sluggish demand outlook will not cause massive scrapping.
Recently, the idle fleet has come down rather sharply. According to Alphaliner, the capacity of the idle ships amounted to 292,943 TEU on 29 April - down from 908,479 TEU on March 4.
Overall, BIMCO has low expectations for demand growth in 2019. A protectionist's approach to global trade and a high sales-to-inventory ratio in the US set limits for how strong peak-season import will be.
As BIMCO forecasts weak demand growth for the coming quarters, the container shipping industry is set to return to negative margins.
WORLD SHIPPING