The shipping industry must still exercise caution in 2018

2018-01-10 09:00

The global shipping industry saw a significant positive shift in 2017; however, 2018 still requires a cautious approach to maintain the progress achieved.

BIMCO recently stated that economic growth has accelerated in Europe, Asia, and America since mid-2016. Global GDP growth is slightly up in 2018, reaching 3.7%, higher than 3.6% in 2017. In 2018, if ships continue to maintain slow steaming, the dry bulk market's basic market balance may further improve.

For the container shipping industry, the improvements of 2017 will continue into 2018, and the fleet growth rate seems to be in line with demand growth, so there will be no large-scale increase in freight rates to improve fleet profitability.

For the oil shipping industry, benefiting from the slowdown in fleet growth, there is potential upside for crude oil and product tankers. Market demand growth, increased oil consumption, and price arbitrage have driven a rebound in oil shipping trading activity, depending on a more balanced oil market.

BIMCO, citing data from the International Monetary Fund (IMF), expects global GDP growth to remain at the 2017 level in 2018, a situation that will continue until 2022. However, world trade volume growth is expected to fall from 4.2% in 2017 to 4.0% in 2018.

BIMCO indicates that the shipping industry has adapted well to lower market demand growth levels over the past few years. The challenge for the shipping industry is to continue adapting to a market situation where demand levels will not increase significantly. 2018 may be the first year since 2011 that the shipping industry sees a rebound in profitability, but profits are not expected to recover quickly.

BIMCO predicts that the challenge for dry bulk ship owners and operators in 2018 is to continue maintaining slow steaming. Market capacity supply is expected to grow by around 1% in 2018, down from 3.2% in 2017. The net growth rate of the crude oil tanker market in 2018 will reach around 2%, down from 5.1% in 2017, while the product tanker market's capacity supply growth rate is expected to be 1.8%, down from 4.2% in 2017. Compared to 2017, the container shipping market is expected to show some signs of a rebound in 2018 due to rising freight rates and reduced market volatility. The container ship market's net fleet growth rate in 2018 is expected to be 4.1%, slightly up from 3.3% in 2017.

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