BIMCO outlines shipping industry outlook for 2017

The international shipping organization said 2017 will be another die-hard year of competition and it projects the container shipping segment to see a net fleet growth of around 3.1 percent in 2017 compared with an estimated 1.1 percent in 2016.

BIMCO outlines shipping industry outlook for 2017

The international shipping organization said 2017 will be another die-hard year of competition and it projects the container shipping segment to see a net fleet growth of around 3.1 percent in 2017 compared with an estimated 1.1 percent in 2016.

BIMCO outlines shipping industry outlook for 2017

The international shipping organization said 2017 will be another die-hard year of competition and it projects the container shipping segment to see a net fleet growth of around 3.1 percent in 2017 compared with an estimated 1.1 percent in 2016.

 
The Baltic and International Maritime Council (BIMCO), a Denmark-based international shipping organization, said the shipping industry will face rough seas going forward in 2017 as the International Monetary Fund (IMF) is anticipating the lowest level of global GDP growth since 2009.
    "In 2016, the container shipping industry bit the bullet in terms of demolition and consolidation to help the market to recover," BIMCO said in the market outlook section of its yearly Reflections publication. "The dry bulk sector needs to copy that approach."
    2017 will see another year of die-hard competition, including the tanker industry, BIMCO said.
    "For eight years, the world has struggled to cope with huge changes and challenges brought around by the crash of the financial market in 2008," the organization said. "The resulting issues have not always been dealt with in the best way, leaving many large economies still in ‘recovery’ mode.
    "The full restoration of shipping markets will need several years of solid improvements to lift fleet utilization rates. Sector overcapacity almost everywhere must be reduced. Government support for any industry - including shipping - which is feeling the heat of global competition, might seem like a good thing. But direct subsidies from governments in fact have a negative impact on the global shipping industry as they affect free trade and undermine the level playing field for businesses."
    BIMCO added, "In pure economic terms, 2016 has seen Europe improving, the U.S. stagnating and Japan at a standstill. So, we have not seen much global change aside from some interregional trade flows, and there has been no real growth of demand on a broader scale."
    BIMCO said it believes the world is unlikely to grow its GDP in 2017 in a way that will benefit the shipping industry, noting the global GDP growth is driven by service sectors and developing/emerging economies, resulting in a lower "GDP-to-trade multiplier," and therefore generating a lower level of shipping demand.
    In the container industry, BIMCO said, "After deteriorating market conditions in 2015, with a very high fleet growth and a sensationally high number of new orders for future delivery, 2016 got off to a bad start. The need to match the supply of container shipping capacity with global demand for containerized goods became even more urgent."
    "Many operational tools have been successfully applied in the market already (slow-steaming and idling), leaving the non-operational tools to be put into action in 2016 (limiting new orders, scrapping and consolidation)."
    2016 has been a momentous year for consolidation in the container shipping industry, with mergers, the planning of new alliances, and Hanjin filing for bankruptcy.
   "Additionally, the very low number of newbuilding orders was backed up by an all-time high of demolition capacity reducing the harmful effects of new ships being delivered. Panamax ships went out of fashion, resulting in further value erosion of the ship size that turned out to be the one which was squeezed out between the feeders and the very large ships," BIMCO said.
    "Generally, the container shipping industry has found it difficult to adapt to the new normal where demand grows by a multiple of global GDP growth of one or even below, unlike the multiplier of two or more experienced year on year in the past," the organization added. "Nevertheless, market conditions ended up improving in 2016 as fleet growth was lower than demand growth, the first time since 2010."
    BIMCO said it expects the container shipping segment to see a net fleet growth of around 3.1 percent in 2017 compared with an estimated 1.1 percent in 2016.
    "If the multiplier gets back to one, and the IMF forecast of 3.4 percent becomes reality, the market will neither improve or worsen in 2017," it concluded.

The United States announced further plans to raise tariffs on goods from China. Who will really profit from the trade war? Data shows the EU, Mexico, Japan and Canada come out as big winners.
 

Twelve container shipping companies deploy capacity from Asia to Mexico, with COSCO deploying the most capacity on the trade each week, according to BlueWater Reporting's Carrier/Trade Route Deployment Report.

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BIMCO outlines shipping industry outlook for 2017

The international shipping organization said 2017 will be another die-hard year of competition and it projects the container shipping segment to see a net fleet growth of around 3.1 percent in 2017 compared with an estimated 1.1 percent in 2016.

Jan 04, 2017 on Dec 27, 2018AmericanShipper.com

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BIMCO outlines shipping industry outlook for 2017

The international shipping organization said 2017 will be another die-hard year of competition and it projects the container shipping segment to see a net fleet growth of around 3.1 percent in 2017 compared with an estimated 1.1 percent in 2016.

Jan 04, 2017 on Dec 27, 2018AmericanShipper.com