SMART4SEA Conference & Awards
2018
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SMART4SEA Conference & Awards
2018
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Global shipping to remain negative during 2018

global shipping remains negative
Above image is used for illustration purposes only

Global shipping is expected to remain negative, as no material improvement in market fundamentals in 2018 is bound to happen, mainly because of lingering overcapacity, with the tanker shipping sector being the most exposed.

According to Fitch Ratings, container and bulk showed signs of a revival, but the longevity of this trend is uncertain due to limited compliance to capacity discipline in the sector.

The supply and demand dynamics will possibly support container, bulk and LNG rates, but tanker rates could remain under pressure.

As far as the tanker shipping is concerned, its sector is the most exposed following a glut of new vessel deliveries in 2017.

Demand for tankers is expected to grow by 4% in 2018. This, however, is not enough to match the expected growth in tanker supply. Rates therefore may not fall further, but a sustained increase is unlikely.

Furthermore, container shipping freight rates may have increased this year, but because of the mentioned overcapacity, their recovery is fragile and previous rate increases have proved to be short-lived.

“We expect supply growth to be over 5.5% in 2018, outpacing a likely over 4.5% increase in container transport volume growth. A sustainable recovery in rates will need continuous and consistent capacity discipline in the industry. This could be driven by consolidation in the sector over the medium term,” Fitch Ratings reported.

Similar to container shipping, recovery in dry bulk shipping rates can also be short-lived. China will still be the key driver for dry bulk commodities imports and trade and the sector will be sensitive to Chinese GDP growth, which is suspected to be around 6.4% in 2018.

To read the full report regarding the growth of global shipping, click here.

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