The IMF has in its January WEO update raised its global GDP growth forecast for 2024 to 3.1% and for 2025 to 3.2%. The upgrade was due to better economic resilience in the US and in some large emerging/developing economies, and higher than expected fiscal support in China.
The Chinese GDP growth looks like it has exceeded expectations and has preliminary come in at 5.2% in 2023. Most forecasts point at a growth of 4.6% in 2024. Negative risks are mounting geopolitical tensions that could heighten economic uncertainty, with negative effects on consumption, foreign and domestic demand.
A higher-than-expected economic growth in China is good news for container ship operators. The decisions to avoid sailings through the Red Sea and instead opt for the two weeks longer round the south of Africa will absorb tonnage. The Houthi attacks on ships passing through the Red Sea will hopefully cease soon, but the repercussions on global supply chains will take many months after that to clear.
Looking at the development of larger parts of the container fleet, any additional demand the next couple of years are positive for ship operators as the fleets will be flooded with new capacity.
The large ships, of 10,000teu and above are mostly engaged in services between the Far East and Europe (new post-Panamaxes), and between the Far East and the US East Coast (up to neo-Panamaxes). The fleet is still young, so there are very few removal candidates. The net fleet capacity growth will peak at 16% this year according to maritime-insight forecasts.
The fleet of ships ranging from 3,000teu up to 10,000teu has a different age profile. Here we see quite dramatic changes already going on as the older tonnage is being phased out, and new – often larger – ships are built and deployed. The strong growth of intra-Asian and north-south trades will absorb parts of these capacity additions.
This piece is from the monthly report series, mi Shipbuilding and Fleet Forecast.
A report from Maritime Insight, posted on February 15, 2024.
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