THE current container freight downturn, driven by global warming, will help the market recover in the mid- to long-term, according to London's S&P Global Market Intelligence, reports Ventura, California's gCaptain.
'Limited supply growth driven by regulations, which will lead to vessel demolitions and speed reduction, may help the market to recover in 2024 onwards,' said said S&P analyst Daejin Lee.
With the IMO's Efficiency Existing Ship Index (EEXI), a technical design requirement for existing ships, many vessels will go for Engine Power Limitation (EPL), and maximum and operating speed are expected to be reduced, says S&P Global Market Intelligence.
Alternatively, the UN's Carbon Intensity Indicator (CII) regulation, which will be assessed yearly with stricter emission limits, will start to reduce sailing speed from 2024.
While a significant drop in freight rates with high bunker prices has already reduced sailing speed, EEXI-EPL will prevent potential speed recovery.
'Since 95 per cent of vessels in service are still using conventional fossil fuel, with IMO's CII regulation, many vessels will end up scrapped, shortening lifespan of ships, which will support freight market in the medium and long term,' said Mr Lee.
SeaNews Turkey
'Limited supply growth driven by regulations, which will lead to vessel demolitions and speed reduction, may help the market to recover in 2024 onwards,' said said S&P analyst Daejin Lee.
With the IMO's Efficiency Existing Ship Index (EEXI), a technical design requirement for existing ships, many vessels will go for Engine Power Limitation (EPL), and maximum and operating speed are expected to be reduced, says S&P Global Market Intelligence.
Alternatively, the UN's Carbon Intensity Indicator (CII) regulation, which will be assessed yearly with stricter emission limits, will start to reduce sailing speed from 2024.
While a significant drop in freight rates with high bunker prices has already reduced sailing speed, EEXI-EPL will prevent potential speed recovery.
'Since 95 per cent of vessels in service are still using conventional fossil fuel, with IMO's CII regulation, many vessels will end up scrapped, shortening lifespan of ships, which will support freight market in the medium and long term,' said Mr Lee.
SeaNews Turkey