The first half of the second quarter of 2024 found ocean liners facing an unusual condition: all five major maritime industries showed momentum in terms of rates, while for the vast majority demand-supply balance messages appeared encouraging.
Now, as we move towards the end of the first half of the year, the signs remain positive, despite the correction recorded in some markets, such as dry bulk carriers.
Examining the main markets one by one, in tankersThe upward momentum that began in the second half of 2022 remains lasting, despite the intense volatility created by a series of factors.
The geopolitical scenario still remains the number 1 condition closely watched shipowners. Decisions on the Middle East, Venezuela and Russia create an unpredictable scenario that has so far benefited freight rates, while oil demand appears to be recovering faster than expected.
In terms of supply, despite the “jump” in new shipbuilding contracts, the order book is even smaller, compared to the averages of previous years.
It is clear that the good market prevents shipping companies from selling ships for recycling, a condition that has increased the share of old ships in the active fleet to 50%.
Turning to bulk carriers, it is noted that they had one of the best first quarters on record, in a period that causes seasonal “headaches” for shipowners, driven by strong Chinese imports and rearrangements in commercial patterns due to the crisis in Red Sea.
At the forefront of this uptrend were the large capesize trucks, which followed a frantic rally, before finally correcting themselves to some extent, while a “speed” behind were the mid and small sizes of the market.
At the same time, shipowners’ reluctance to invest in new tonnage has kept the order book at very low levels, with fleet growth expected to be particularly low until at least 2026.
And recycling activity may be slow, but the increasing age profile of the fleet portends more tonnage flows to scrapyards in the coming years.
Gases “bloom”.
Its market has shown a steady growth trajectory in recent years LNG“triggering” the demand for new ships that will be able to transport the gas.
In the spring and summer of 2024, we see high levels of gas storage in Europe, which has pushed prices down, while more global LNG flows return to developing Asian markets, which have switched to coal due to higher prices. inflated. of the previous interval.
China, Thailand and Bangladesh record import records, while the terrain is favorable for the emergence of new “players”, such as Vietnam and the Philippines.
This positive import situation coincides with a period of export growth, led by the USA, while Qatar embarked on a titanic development program, filling its shipyards with new ships.
All this while the role of LNG is highly upgraded, both as a means of energy diversification from Russian gas, with FSRU units in the foreground, and as an alternative fuel for ships.
And we closed with a market that truly surpassed all predictions: of LPG transporters. Rates, especially for large VLGC-type vessels, have made big “jumps” in recent months, supported mainly by congestion conditions in Panama Canaldue to restrictions caused by drought problems.
Demand for new projects remains strong and although the order book is in double digits, a significant proportion of the fleet is over 20 years old. Along with LPG, it appears that the maritime trade in ammonia will also “flourish”.
At least this is demonstrated by the massive orders for VLACs from the end of last year until today, many of which were placed by Greek shipowners who, at least, know how to “read” the prospects of the maritime markets.
The crisis in Eritra
If a year ago shipping analysts were talking about an increase in freight rates container ships in the first quarter of 2024, they would probably be considered unreliable, given the weak demand, but also the start of massive deliveries of new constructions ordered in the “crazy” recovery of the previous four years.
The crisis in the Red Sea, however, drastically changed the situation and the demand for additional tonnage due to diversions on the route further from the Cape of Good Hope increased freight rates and also raised asset values, with large container ships earning more.
The order book as a proportion of the existing fleet is still at extremely high levels.