World Shipping Outlook Worsens on Lower Box Freight Rates

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Fitch Ratings’ deteriorating sector outlook for global shipping primarily reflects significantly weaker profits in the container segment due to normalising freight rates, while prospects in the tanker and dry bulk segments are more stable.

Container freight rates fall

Container freight rates fell as supply-chain pressures eased, meaning that profits of container shipping operators will be much weaker in 2023 than in the past three years.

The main risks for the segment include a potential harsher-than-expected recession and the continuation of pandemic-related lockdowns in China, leading to further weakness in demand and manufacturing. Though not likely, any port capacity restrictions in China in excess of lockdown-related production limitations could be positive for container freight rates.

We expect demand growth for oil tankers in 2023 to be similar to 2022 with this segment having more solid prospects than others in the sector. However, shipping measured in tonne-miles will increase due to rising oil exports shipped from Russia to China and India, which were previously supplied to Europe.

Dry bulk volumes go flat

Dry bulk volumes are likely to be almost flat as key factors that are affecting demand will remain in place in 2023, despite some moderation in their intensity. Demand for iron ore volumes will suffer from lower steel production in China due to continuing lockdowns and the real estate market’s weakness.

Coal transportation is affected by curtailed imports from Russia to Europe, and, despite longer alternative routes leading to higher tonne-miles, increased land-based coal imports to China offset this benefit. Demand for grains is affected by high prices and disruptions to Black Sea trade flows.

Order books for both dry bulk carriers and tankers remain at historic lows, close to 7% for bulk and 4% for tankers of their vessel fleets.

‘Global Shipping Outlook 2023’ is available at or by clicking on the link above.

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Source: Fitch Ratings


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