In a five-part series to start 2024 we take a look at where shipping markets are headed in the coming year with experts Maritime Strategies International (MSI).
In this first part the Seatrade Maritime Podcast talked to Adam Kent, Managing Director of MSI, about the overall macro-economic outlook for shipping in 2024.
You can listen to the full interview as a podcast in the player above
Speaking on the podcast Kent noted that in 2023 GDP growth had remained quite mediocre although the global economy was far from recessionary. While interest rates in advanced economies remain high they have started to return to normal.
Focusing in on key economies Kent said the US had continued to outperform in 2023 but there were signs the economy was starting to slow with cooling labour markets and an uptick in unemployment in the US.
“And though we would say that the risks on the US remain weighted to the downside, I think 2024 could be a challenging year for the US. The Chinese economy is underwhelming, the property market still remains very weak, which is obviously having a knock-on implications for some sectors of shipping, especially on the dry bulk side. However, we don't expect the Chinese economy to worsen, and we do expect to see some tick up over the course of the next 12 months or so,” he told the podcast.
Looking to Europe it was noted the economy had remained lacklustre in 2023 but a gradual rebound in activity was expected in the second half of 2024.
In terms of a bright spot in the global economy Kent said: “I think we have to start focusing on India, we've seen some strong growth rates in 2023 and we expect to see this continue into 2024.”
Reviewing shipping markets in 2023 he commented: “If we look at the shipping markets in general I'd say that the shipping markets from an earnings perspective have played out as we had anticipated, or certainly [that is the case] over the course of the second half of 2023.”
There were some surprises such as the upturn of the dry bulk market in November and the first half of December, while sectors such as car carriers and LPG tankers have seen sustained high earnings across the course of the year.
“What we have seen, and we don't see this disappearing anytime soon, is heightened market volatility,” Kent stated.
In terms of volatility shipping has been weighed by the weather events in the Panama Canal resulting in draught restrictions and limiting transit numbers. Geopolitical factors also impact shipping and these became heightened at the end of 2023 with the Red Sea crisis and vessels starting to divert from transiting the Suez Canal to sailing around the Cape of Good Hope.
At the time of recording in the latter part of December 2023 Kent commented: “We do expect these to have implications certainly on the short term for almost all sectors of shipping. How this will play out, and how this will impact shipping and supply chains in the sort of medium to longer term will very much be dictated by how the sort of global superpowers deal with events off of Yemen.”
Looking to the demand side of the shipping equation MSI sees it as looking relatively positive. “In some cases, such as the container ship market, the chemical tanker market, demand or seaborne trade in 2024 will actually be stronger than we saw in 2023 and we aren't too concerned about the demand side of the industry as a whole.”
On the supply side of the equation it very much depends which sector you are looking at. “For the container ship sector, LNG [carriers], and car carriers, we're seeing huge orderbooks which will start to be delivered, and we expect to see a lot more tonnage hitting the water over the course of 2024. This will obviously have a detrimental impact on supply demand balances, whereas further dry bulk sector for the oil tanker sector, the orderbook remained relatively buoyant,” Kent explained.
Tomorrow in part two of the series we will take a detailed look at the container shipping market outlook for 2024
