The Danish shipping bank said it believes seaborne trade volumes in 2030 will be a little higher than today, growing by just 1 percent on average each year.
Danmarks Skibskredit (Danish Ship Finance) has released a downbeat forecast for the shipping industry in the latest issue of its “Shipping Market Review.”
The Danish shipping bank said in the report that it believes seaborne trade volumes in 2030 will be a little higher than today, growing by just 1 percent on average each year.
“Technological innovation will continue to accelerate globalization, but the impact on international trade volumes might diminish,” the report said.
Historically, growth in seaborne trade volumes has been driven by population growth and urbanization, which has translated into higher seaborne demand, but forces currently in play are about to disrupt, or at least significantly streamline large parts of the underlying industries that shipping currently serves, the report said.
“Some of these industries (e.g. the automotive industry, mining, and oil and gas companies) are already in transition and are seeing their market outlook changing rapidly, while other industries (e.g. the petrochemical industry and manufacturing) seem to be approaching the tipping point, whereafter the potential consequences of new technologies could change their market dynamics completely,” the report said.
The report also said the composition of the global fleet is ill-suited for the projected transformation of trade volumes and patterns, pointing out how the world fleet is young and even more vessels are on order, and the average vessel is larger than in the past.
“Freight rates and secondhand values are low across the board, and shipyards are closing, or reducing capacity, due to overcapacity,” the report said. “The shipping industry is simply positioned for growth in seaborne trade volumes and is very vulnerable to forces – ranging from ageing consumers to technological innovation and anti-trade politics – that may reduce growth in trade volumes.”
Overcapacity is hindering most segments of the shipping market, including container and dry bulk vessels, crude and product tankers, gas carriers and vessels serving the offshore oil industry, the report said. Even though freight rates in the container industry have picked up since May, they still remain at historically low levels.
In addition, an increasing amount of vessels are being left without employment and tonnage providers in particular are expected to suffer, the report said.
Looking ahead, the authors of the report believe that while the fleet and orderbook are geared for growth, with net fleet annual growth expected to stay above 3 percent through 2018, demand will not grow.
Danmarks Skibskredit: Seaborne trade volumes will see slow growth in the coming years
