HANSA 07-2022

MÄRKTE | MARKETS
Seatrade outlook marred by recession fears
The big boost to shipping following the gradual lifting of Covid restrictions in China
has not materialized yet. Latest economic data raises doubts about the mid-term outlook.
By Michael Hollmann
It should be peak season for container
and dry cargo shipping with rates rising
across the board, however the opposite is
true. Most indicators in our market compass
tracing freight rates and vessel earnings
month-on-month are down, some of
them very heavily.
Analysts focusing on global trade are
striking a more cautious tone lately amid
growing signs that inflation has started impacting
consumer and industrial demand
in a negative way. Container import demand
in North America and Europe is not
bouncing back as quickly as forecast by
many although, granted, export activity in
China is still hampered by varying degrees
of containment measures across the
country.
A survey by freight booking platform
Freightos among small and medium-sized
business in the US showed that two thirds
of them are experiencing a decrease in
sales. Most of them attribute the dip to consumer
price inflation. Even major retailers
like Walmart and Target are suddenly reported
as carrying too much inventory of
certain durable consumer goods like furniture
and electronics. In Germany, consumer
sentiment already fell from a cliff in
April. Although the fall was arrested during
May, indicators by research institute
GfK remain stuck far below levels this time
last year.
Industrial output shrinking
As this issue of HANSA goes to print, official
purchasing manager indices for the Eurozone
and for the US point to a sharp
slowdown in economic activity in both regions
during June. Of note, the sub-indices
for manufacturing output for both have
dipped below the »growth« threshold of 50
points, suggesting that factory output is
shrinking. The slowdown in the import
powerhouses of global container shipping
is a worrying sign for carriers and
shipowners who are gradually pushing the
orderbook towards 30 % of today’s fleet capacity.
Quite staggering …
The development of spot freight rates for
containers in recent weeks tallies with the
deterioration in economic data. After
briefly stabilising in the middle of May
rates for liftings from the Far East to North
Europe and to the US continued drifting
lower in June. However, rates for shipments
from China to the Middle East and to
South America strengthened.
Productivity bye-bye …
Levels in the transatlantic westbound
trade from Europe to the US East Coast
remained stable at very high levels amid
reports of continued capacity shortages
and despite the redeployment of some
vessels from Russian Baltic trades to the
transatlantic. Shipping capacity in the Atlantic
seems to be restrained by port congestion
a lot more right now than in the
Pacific, partly driven by a shift of import
volumes from West coast ports to East
coast ports. Lengthening vessel queues
were reported at Savannah and New
York/New Jersey and in North Europe
mainly at Hamburg and to some extent at
Bremerhaven.
VIEWPOINT
Congestion and EEXI to
drive tonnage demand
Despite much doom and gloom in the
world economy, charter container ships
remain few and far between. There are
no signs of a downturn in chartering as
more ships will be needed to make up for
inefficiencies and speed reductions, says
Thomas Kolb, a senior broker with Martini
Chartering focusing on competitive
business.
The orderbook for container ships is now
at 27 % of existing capacity – isn’t it madness?
Thomas Kolb: No doubt, the present
order book is huge. However from a historical
point of view 27 % isn‘t that much
compared to 2007 when the ratio was
about 65 %. Also the amount of capacity
ordered by non-operating/tramp owners
»on spec« now is much less at about 14 %
of total capacity on order. Furthermore,
transport chain disruptions, port congestion
and forthcoming emission regulations
with ensuing service speed reductions
will likely result in additional tonnage
demand by shipping lines – maybe a
lot more than people expect today. On
the other hand, the ordering spree might
still continue if market fundamentals remain
unchange…
Zero covid in China, port congestion,
war, inflation … Market stability seems a
long way off. What are your expectations
for the second half of the year?
Kolb: During the past two years, market
instability has led to increasing demand
in a way which no one could foresee. This
Thomas Kolb
Senior Broker
Martini Chartering
© Martine Chartering
10 HANSA – International Maritime Journal 07 | 2022