- The supply/demand balance in shipping tightened in 2024 due to rerouting via the Cape of Good Hope, but fleet expansion poses risks for 2026.
- Supply growth is expected to outpace demand growth from 2019-2026, potentially weakening freight rates.
- Cargo volumes are projected to grow moderately, with South & West Asia and South & Central America leading growth due to regional economic recovery.
Global shipping markets are navigating shifting supply/demand dynamics influenced by rerouted trade flows, fleet growth, and regional economic factors. This update explores key trends, including freight rate fluctuations, time charter stability, and regional cargo growth forecasts, reports BIMCO.
Supply/Demand Balance
Despite rapid fleet growth since 2010, rerouting through the Cape of Good Hope has tightened the supply/demand balance in 2024 by increasing sailing distances and ship demand.
Fleet growth is expected to expand supply by 46% (2019-2026), outpacing the forecasted 22% demand growth. This imbalance may weaken market conditions, especially when normal Suez Canal operations resume.
Rerouting Implications
Rerouting is assumed to persist throughout 2025, with normal Suez Canal operations resuming in 2026.
Market outcomes vary:
- 2025: Slight weakening of supply/demand balance.
- 2026: Significant weakening if rerouting ends or slight tightening if rerouting continues.
Cargo Volume Growth
Cargo volumes are projected to grow 5.5%-6.5% in 2024, 3%-4% in 2025, and 3.5%-4.5% in 2026.
The fastest growth regions include:
- South & West Asia: Driven by economic recovery in oil-exporting countries.
- South & Central America: Boosted by Argentina’s emergence from recession.
Freight and Time Charter Rates
Freight rates have stabilized since October 2024 but may decline slightly in 2025 and significantly in 2026.
Time charter rates remain stable due to longer fixture periods (average rising from 8 to 24 months), supporting rates through 2025 but weakening in 2026.
Ship Prices and Recycling Trends
Prices for five-year-old ships have climbed to nearly 80% of new building prices, while recycling prices fell 6% in 2024 due to cheap Chinese crude steel.
New building prices may have peaked, but continued container and bulker contracting could surprise forecasts.
Key Uncertainties
Potential import tariffs under President-elect Trump could disrupt trade and economic growth.
High household savings could boost imports if falling inflation and interest rates encourage consumption.
Recommendations:
Monitor fleet growth and rerouting developments to anticipate market shifts.
Focus on high-growth regions like South & West Asia and South & Central America for cargo opportunities.
Prepare for freight and time charter rate declines in 2025-2026.
Did you subscribe to our daily Newsletter?
It’s Free Click here to Subscribe!
Source: BIMCO
