According to Drewry, Capesize shipping demand is projected to grow by 3.3% in 2024, driven by Colombia’s increased coal exports to the Far East. As Europe scales back its coal imports, freight rates on the Colombia-ARA route have declined, but rising demand in the Atlantic-Asia trade is expected to boost Capesize vessel earnings.
Surge in Colombia’s Coal Exports to the Far East
Colombia’s coal exports have increased by 12% year-to-date in 2024, reaching historically high levels. A significant portion of these exports has shifted from Europe to Asia, particularly China, South Korea, Japan, and Taiwan, due to Europe’s declining reliance on fossil fuels and growing emphasis on renewable energy.
Decline in EU Coal Imports and Production
Europe’s coal imports have substantially decreased in 2024 due to reduced electricity demand, increased renewable energy generation, and milder weather. Coal’s share in the EU’s energy mix dropped to a record low of 9% in early 2024, reflecting the Continent’s commitment to reducing emissions and fossil fuel dependence.
Impact on Capesize Shipping and Freight Rates
With Europe’s declining coal imports, freight rates on the Colombia-ARA route have fallen, but the increased exports to the Far East have driven up tonne-mile demand on the Colombia-Far East route by 126% year-to-date. The rerouting of vessels via the Cape of Good Hope has also expanded shipping demand, supporting Capesize rates and offsetting declines in the Atlantic market.
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Source: Drewry
