Shipping Market’s Prospects Look Rosier Despite Challenges

Despite the challenging environment, under which the shipping industry must operate today, prospects for tankers and to a lesser degree bulkers, remain rosy. In its latest weekly report, shipbroker Intermodal said that “2023 has been a very challenging year so far. We have seen the war in Ukraine still going on, persisting inflation, high interest rates, economic recession, oil sanctions, price caps, new tanker ton-miles, EEXI Compliance, slow steaming, China crawling back to consumption and growth, just to name a few. However, as an old Chinese saying goes, “The wise adapt with the times, and the knowledgeable adjust as the situation evolves” and there is no better example of the wise and knowledgeable than our industry, Shipping. Shipping always adapts as the situation evolves, be it in regulations, in fuels, in fuel prices, in wars or other geopolitical tensions, be it in world trade, in supply chains, you name it. This is what Shipping does; it understands the era’s developments and overcomes any boundaries and challenges from major upheavals and comes on the other side reshaped and ready for future developments”.

According to Intermodal’s SnP Broker, Mr. Theodore Ntalakos, “facts and estimates couldn’t be better for tankers. Oil consumption globally is forecast to hit new record highs in 2023 and 2024. While the new refinery capacity is affecting average sailing distances which are also increasing and according to BIMCO forecasts they estimate tonne miles growth of between 5.0% and 6.0% in 2023, and between 5.5% and 6.5% in 2024 for both crude oil and products. On the supply side, the tanker fleet grew by about 150 vessels or 2.7% over the last year, pretty much the same as the year before. Of these new vessels, most were VLCCs, around forty five ships; forty of them were Aframax/LR2 size and another forty ships were MR tankers. The Suezmax fleet remained the same. In the LR1/Panamax sector for the first time after many years the fleet grew by about twenty vessels. The orderbook for tankers has expanded since last year, just for the second time in the last five years, bringing the orderbook-to-fleet ratio to about 6.5%, while the overaged fleet of vessels over 20years old also grew and it now represents more than 13% of the fleet; these numbers versus the expected increase in oil consumption and ton-miles…good news for tankers”.

Meanwhile, in the dry segment, Mr. Ntalakos commented that “on the dry bulk prospects are again more tight; there is persisting inflation, high interest rates and persisting signs of slowing economic activity in Europe and USA. Also although China still remains the driver of growth, there are concerns about the slowdown in the Chinese economy. The silver-lining however, is that the OECD indicates that the worst could be over and its in predicting that economic activity will begin to increase and the economy in the aforementioned regions could begin to grow faster than trend towards the end of the year. On the dry bulk ship supply side, the world fleet has increased by around 400 vessels year-on-year corresponding to a growth of 2.5%, while over the previous years it was about 2.9% (2022), 3.6% (2021), 3.8% (2020) and 4.0% (2019). This, despite the increased price environment, led to an order replenishment and currently the dry bulk orderbook has expanded to about 8,% of the world fleet. Also notable, we now have more than six hundred vessels over 25years old in the fleet, and all the bulk carriers older than 20 years represent close to 12% of the world dry bulk fleet; it was 12% last year and 10% the year before, an ageing fleet mainly on the smaller sizes”, he said.

“So, business as usual, we keep watching the needs, the regulations, the requirements and the risks of the World trade and we keep adapting to exploit the opportunities that emerge”, Intermodal’s broker concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide