BIMCO Container Market Outlook: Tightening Supply/Demand Balance

BIMCO recently published its Container Shipping Market Overview & Outlook for December 2024, offering a detailed analysis of the industry’s supply and demand landscape.

Despite a speedy increase in vessel supply and fleet expansion, the supply-demand balance in 2024 has tightened. A major factor contributing to this shift is that 90% of the capacity that typically passes through the Suez Canal has opted for a longer route via the Cape of Good Hope. This decision has resulted in both longer sailing distances and increased demand for ships. However, concerns remain about fleet expansion when vessels eventually revert to their usual routes.

BIMCO estimates that by 2026, fleet growth will amplify the supply by 46% compared to pre-2019 levels, while cargo volumes are anticipated to raise ship demand by 22% between 2019 and 2026. Despite the predicted decline in average sailing speeds, which would reduce the supply, forecasts suggest that the 2026 supply-demand balance will be less robust than in 2019.

In its recent assessment, BIMCO has prolonged its projection for vessels to resume normal navigation through the Suez Canal. The organization now anticipates that this rerouting scenario will persist throughout 2025, with a gradual return to normalcy in 2026. This shift in timeline is likely to result in a minor weakening of the supply-demand balance in 2025, followed by a more substantial downturn in 2026 due to an expected decrease in ship demand.

The cargo volume, which experienced subdued growth in 2023, is projected to expand by 5.5-6.5% in 2024, with estimated growth rates of 3-4% in 2025 and 3.5-4.5% in 2026. Import volumes into South & West Asia and South & Central America are anticipated to experience the swiftest growth. Factors such as projected economic advancement in oil-exporting nations in West Asia by the International Monetary Fund (IMF) may boost volumes in the region. Furthermore, Argentina’s recovery from recession is likely to lead to increased volumes in South America.

Freight rates have shown increases for exports shipped from Shanghai (SCFI) and China (CCFI), averaging 148% and 64% higher than the previous year, respectively. While rates escalated between April and July, a decline was observed from July to October as market demand waned post-peak season. Since October, rates have stabilized, with hikes in shipments to Europe & the Mediterranean counterbalancing drops in North American routes.

Looking ahead, supply-demand projections suggest that freight rates might experience a slight dip from current levels in 2025 but are expected to decline more noticeably in 2026. Despite the softening freight rates, time charter rates have maintained stability, with an increase in average fixture periods from eight months to 24 months since the beginning of the year. The prolonged fixture periods are likely to reduce the availability of time charter tonnage.