Photo by M Anink on Unsplash

Latest BIMCO shipping market overview forecasts up to 6% growth in 2024

According to the latest market overview by BIMCO, extended re-routings of container ships via the Cape of Good Hope have caused a notable increase in global shipping demand. BIMCO states that as a result of the Red Sea crisis, time charter rates have surged by 113%, while the Chinese Containerized Freight Index (CCFI) has risen by 90% in the first half of the year.

You can read this article in 3 minutes

The latest BIMCO market update stresses that the strength of the market heavily hinges on the re-routings via the Cape of Good Hope, bypassing the Red Sea and Suez Canal.

This adjustment, initially anticipated to affect only the first half of 2024, is now projected to extend through the entire year, says BIMCO, who believes that normal routings will not resume until 2025.

This, it is said, shall significantly impact both the supply and demand dynamics within the market.

Supply and demand balance

BIMCO’s forecast for 2024 has global volume growth estimated at 5.0-6.0%, with head-haul and regional trades projected to expand by 5.5-6.5%.

This growth in demand is to be met with an anticipated record-high delivery of new ships, expected to add 2.8 million TEU to the market.

BIMCO notes that the increased sailing distances due to reroutings are a major factor contributing to the higher demand for shipping capacity. This is also being exacerbated by rising congestion in several transshipment hubs.

Market indicators and trends

According to BIMCO, time charter rates have surged by 113% compared to the end of 2023, which is said to be reflective of liner operators’ scramble to secure sufficient shipping capacity.

Similarly, BIMCO adds that the Chinese Containerized Freight Index (CCFI) soared by 90% in June 2024, highlighting the substantial increase in freight rates for Chinese exports.

Moreover, asset prices, although not increasing as dramatically, have seen a 10% rise in second-hand prices compared to the end of 2023.

This moderate increase in asset prices, alongside the relatively low sales and purchase activity, is said to highlight the industry’s cautious approach, with potential oversupply anticipated once normal routings resume in 2025.

Future outlook and risks

The outlook for 2025 is less optimistic, with an expected significant weakening of the supply/demand balance if normal routings through the Red Sea and Suez Canal resume.

Freight rates and time charter rates are anticipated to decline in the second half of 2024 and continue into 2025.

Several developments could nonetheless disrupt the current forecast.These included escalated trade disputes between the EU, US, and China, as well as persistent inflation and high-interest rates in the US and EU.

BIMCO concludes that these economic pressures could lead to reduced consumer and business spending, thereby lowering shipping volumes.

Photo by M Anink on Unsplash