- Surging Tanker Orders and Normalizing Ton-Mile Demand.
- Bulker Market Benefits from Green Transition and Trade Growth.
- Container Market Faces Surplus Supply and Declining Freight Rates.
Houthi attacks across the Bab Al-Mandeb Strait have caused significant disruptions, with re-routing around the capes. Consequent to this aspect, the impact varies on different market segments of shipping. The Houthis are hardly predictable; a sudden stop in their attacks might result in more downside risks, while the possibility of upside potential could rise if the conflict were to drag on, reports VesselsValue.
China’s Economic Recovery and Global Role
Economic recovery in China remains fragile. Its export-based economy has always been sensitive to potential trade wars and is another critical uncertainty component. Its recovery in oil demand and import needs will be critical for defining the tanker market in the following years.
Tanker Market Dynamics
Tanker ordering activity has surged, with 2024 surpassing 2023 levels by 33%. Orders are expected to reach 50 million DWT this year, compared to last year’s 36 million DWT. While ton-mile demand has seen strong growth over the past three years, it is expected to normalize from 2025 onwards.
Russian crude and product exports are likely to fall, but ton-mile demand is likely to be supported by increased sourcing from regions like MEG, the US, and Latin America. Supply and demand growth will be moderate and keep the market balanced with healthy freight rates.
Bulkers Market Trends
China’s strong imports of iron ore, bauxite, and coal in 2024 have led to inventory accumulation as domestic demand has been slow. The Guinea-China bauxite trade and the Brazil-China iron ore trade will be the drivers of ton-mile demand growth in the coming years.
The green transition is another critical driver of bulker demand growth. Steel products, cement, and other minor bulk commodities such as bauxite, copper, and nickel, will be required as climate change programs gain pace.
Container Market Outlook
The improvement in water levels has normalized transits through the Panama Canal. Rerouting remains a consequence of conflicts such as the Houthi attacks, which continue to affect international shipping. TEU-mile demand is projected to increase by 16.7% in 2024 and is estimated to grow at a yearly average of 3.2% from 2024 to 2028.
Freight rates are expected to decline steadily from 2025 as new vessels enter the market, outpacing demand growth. With more than 8 million TEU entering the market in the next few years, surplus supply will pressure freight rates despite the ongoing rerouting challenges.
Gas Market Developments
The LPG market has shown significant growth; Asia-Pacific imports have increased by 12% in 2024. US exports to China have increased by 36% and are supporting global CBM-mile demand. India has also gained significantly, with imports increasing by 29% and accounting for 27% of global butane demand.
VLGC earnings averaged $43,000/day in 2024 but are expected to decline slightly to $41,000/day in 2025, mainly because of limited export growth. Earnings should strengthen further in 2026 with new terminal expansions and then ease in 2027 and 2028 with supply growth. The seaborne ammonia trade declined by 1.3% in the first three quarters of 2024. While global ammonia trade is expected to grow with the development of blue and green ammonia projects, delays in these initiatives suggest limited growth in the short term.
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Source: VesselsValue
