How the shipping market will be in 2021?

2020-11-11 Source: Jctrans

Shipping was considered among the sectors most at risk from a global pandemic, but many companies have reported earnings either above year-ago figures. However, as the end of 2020 and optimism grows that the virus can be brought under control,there are factors that may make 2021 more challenging.


As shipping companies prepare to release their third-quarter results, there are very few alarm bells ringing that the industry is suffering any great adverse impact from the coronavirus pandemic.

Global containerised trade was up 2.7% in the July-September period,compared with the same priod last year

Global containerised trade was up 2.7% in the July-September period, compared with the year-earlier period, and the year-to-date volume is just 3% behind the equivalent period in 2019 following a 6.9% rise in September, the second consecutive month of growth.

Third-quarter volume growth marks a startling turnaround for carriers, which, back in April, were left reeling from a 13.1% slump in volumes amid the height of the initial pandemic outbreak that would have left many fearing the worst.

Strong throughput at US ports in the past few months has shown that import demand is bouncing back faster than expected as retailers restock and there is much confidence that freight rates will remain high in the final quarter.

The dry bulk market has been volatile this year in comparison, but China’s massive infrastructure investment and resulting hunger for raw commodities such as iron ore and coal, as well as soyabeans to boost national reserves, has kept earnings at a reasonable rate throughout.

Against this largely positive picture for 2020, though, there are some dark clouds that could potentially see a shift in outlook for 2021 and beyond.

 China is the only major economy expected to record GDP growth in 2020

Much of the uncertainty is of course related to the global economy and how long the coronavirus pandemic will last. According to the International Monetary Fund’s latest forecast, China is the only major economy expected to record GDP growth this year but other markets will see a significant bounce back in 2021.

Capacity discipline has been one of the key reasons why container carriers have been able to record such high freight rates this year, with blank sailings introduced early and hard to align supply better with the fall in demand. But that situation is already reversing, with ships being returned to service and up to a fifth more capacity on some routes than last year.

A lack of new orders and deliveries for ships, and an acceleration in scrapping, has also helped to keep a lid on capacity growth and maintained the delicate market equilibrium. But with new orders expected to jump in 2021, any small change in fleet size could have an impact on market rates by the time they hit the water.

Even in the best-case scenario on the global economy, there will only be a return to growth in the second half of 2020, while many developing nations are expected to recover much more slowly. With this in mind, despite the positives from 2020, shipping must continue to proceed with extreme caution.

Article source:Lloyd’s List

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