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BIMCO: Global freight rates high, but falling as growth falters

Author:   Posttime:2022-10-10

THE Baltic and International Maritime Council (BIMCO), representing 60 per cent of the world's merchant fleet, has reduced its projections of container trade growth in 2023 from 3-4 per cent to to 1-2 per cent, reports Athens' Safety4Sea.

"Global economic headwinds are adding many risks to container demand and upsides are difficult to identify," said BIMCO chief analyst Neils Rasmussen.
"The fleet supply/demand balance is predicted to worsen, and although carriers can maintain a tight cargo supply/demand balance by adjusting deployment, we predict that freight rates will continue to fall. At the very least, contract rates must be expected to again move below spot rates," Mr Rasmussen said.
"We therefore envisage a certain degree of 'normalisation' during 2023, with much less congestion and reduced vessel delays. While we predict a reduction in freight levels, we do not think that these will revert to the very low pre-Covid levels," he said.
The Shanghai and China Containerised Freight indices (SCFI and CCFI) have fallen by 50 per cent and 19 per cent respectively since the beginning of the year but remain significantly above 2019 levels due to the significant increases recorded between mid-2020 and early 2022.
Time charter rates and second-hand prices have also fallen but remain high; five-year-old ships are on average 34.7 per cent more expensive than new builds.
The IMF has lowered its global economic growth forecast to 3.2 per cent for 2022 and 2.9 per cent for 2023, and highlights that the risk of a global recession has increased.
The fleet is expected to grow 2.9 per cent in 2022 and by eight per cent in 2023. Vessel demand is expected to increase 10 per cent due to EEXI and lower sailing speeds, while we believe that seven to eight per cent of the fleet will be released from congestion by spring 2023 at the latest.
Overall, the fleet supply/demand balance will worsen and lead to lower time charter rates and second-hand prices. We equally expect further reductions in freight rates, but they will remain significantly higher than in 2019.

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