BIMCO advises cautious optimism

January 5 - The Baltic International Maritime Council (BIMCO) has warned that while 2017 was a year of change, much of it for the better, a cautious approach is still needed for 2018 to maintain the progress already achieved.

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Friday 5 January 2018

In 2018, the dry bulk sector is likely to improve the fundamental market balance further, if operational speeds do not increase, said BIMCO, adding that, for the container shipping sector, the improvement in 2017 will carry on into 2018, where fleet growth rate seems to match demand growth, and as a result no significant freight rate changes are expected to lift earnings.  

BIMCO said: "The shipping industry has adapted quite well to a lower level of demand growth over the past couple of years. The next challenge is to understand that this is as good as it gets, and to avoid wishful thinking that demand levels will increase significantly - as that will not happen. The biggest risks to the forecast remain on the downside, meaning that fleet could grow too much or demand too little."

In the dry bulk sector, with demand growth reaching a rate of 5 percent in 2017, BIMCO predicts that 2018 could become the first year since 2011 that the sector returns to profitability, but added that the majority of the profits would reside with shipowners.

The prolonged draw down of global crude oil and oil product stocks proved to be a drag on tanker demand throughout 2017.  "Not until we see global oil stocks at a much lower level, can we expect a renewed interest in seaborne oil trading activities that will lift oil tanker demand from its current subdued level," said BIMCO.

It added that, after a better year for container shipping, the potential for profit was good, assuming demand growth remains in the region of 4-5 percent and actual fleet growth is handled with care.

In September, the ordering drought came to an end with 20 new orders for 22,000 teu ships due to be delivered in 2019-2020. "This means," concluded BIMCO, "that the nominal fleet growth level for the container shipping industry over the next few years is set for around 4 percent, which leaves little room for fundamental market balance improvements. As a result, increased earnings must come from: continued cost-cutting exercises and permanent slow-steaming to keep fuel costs on a tight leash."

MV Polynesia.jpg

 

www.bimco.org

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