The future of liner transport is bleak! Unless the shipping company takes radical action

Shipping companies have delayed the delivery of some very large vessels until next year and may try to renegotiate with shipyards to push back the delivery date of the newly built vessels as much as possible.

In its Q4 market Overview and outlook, Bimco said the container fleet is expected to grow by 8.8% to more than 30 million TEU next year, following an expected 7% growth this year, and by a further 6.4% by 2025. "Even in the best of times, ships will not see a similar increase in demand," the company said. Bimco expects global container volumes to remain flat or increase to 1 per cent this year, with growth of between 3 and 4 per cent in 2024 and 2025, compared with explosive growth in the supply of container ship capacity.

The only bright spot in the demand outlook is the secondary market. "While only accounting for around 23% of global imports, the current growth drivers for the container market are the Indian subcontinent, the Middle East, South and Central America, and sub-Saharan Africa," Bimco said. At the same time, the shipping organization said that the delivery date of new ships is currently delayed.

Container ship dismantling volumes will struggle to reach 200,000 TEU this year, but analysts say volumes could double or even triple next year as owners scrap older ships and daily rents are expected to fall below economic levels. In addition, a further slowdown in speed will absorb capacity, as will a diversion from the Panama Canal to the longer Suez Canal or Cape of Good Hope routes, as well as other geopolitical issues and occasional "black swan" events.

Despite this, Bimco believes that the outlook for the liner industry remains bleak unless carriers are prepared to take radical measures in terms of capacity management strategies, rather than just cancelling voyages. "Our forecast is that the weakness that started in 2022 and continues in 2023 will continue in 2024 and 2025," Bimco said. "Recently, however, there have been indications that rates have fallen so low that liner operators are ready to take action. While we do not believe liner operators will be able to significantly increase rates, we do believe they will be more focused on aligning their operating fleets to actual demand."