A reduced appetite for ultra large container vessels (ULCV) among the major carriers will benefit the industry’s supply-demand balance, says Simon Heaney, senior manager, container research at Drewry and editor of the Container Forecaster.
Heaney confirms that “aside from feeder ship replenishment, there has been no reaction from other lines to HMM’s mega-ship order and as such we have greatly reduced our projected new orders for 2020 onwards.”
“This subsequently feeds into a much brighter supply-demand index forecast for carriers through 2022, although the index is still expected to remain below the important 100 marker, indicative of a tighter but still over-supplied market. Ultimately, we believe that these adjustments on the supply side will be sufficient to cushion the blow from slowing demand growth and will contribute to better freight rates and profits,” said Heaney.
According to Drewry, weaker global macro-economic drivers contributed to a downgrade to Drewry’s port throughput forecast for 2019 to approximately 4 per cent. The maritime research, consulting and financial advisory services predict that the softening trend should be mitigated by changes made on the supply side to better balance the market.
According to the maritime research, consulting and financial advisory services firm, deliveries have been more widely spread than before with more original 2018-19 newbuilds being pushed out to 2020. With an increase in demolitions, the net addition to the fleet is expected to be only half that of 2018, leading to a fleet growth rate of just 2.5 per cent, says Drewry.
Drewry also expects that supply-side moves associated with IMO 2020 have the potential to curb capacity, at least on a temporary basis.
Scrubber retrofits could see some ships taken out of service for weeks at a time, but Drewry expects shipowners to idle and eventually scrap older and less economic ships before January 1, 2020 arrives and the 0.5 per cent cap enters into force. Slow steaming will help absorb new capacity and reduce the negative influence of the cascade on the supply-demand balance, reports Drewry.
Heaney adds: “Last year was one of the most unpredictable the container shipping industry has faced, and this year is likely to be similarly volatile with question marks still hanging over the US-China trade war and new fuel regulations. However, despite being dogged by uncertainty, Drewry is predicting another solid year for the market.”
