First half 2023 statistics for the international shipping industry have been released by Clarksons Research. Reviewing the data, Steve Gordon, Managing Director of Clarksons Research commented:
Most shipping sectors remain in positive territory, despite an easing of overall conditions (our cross-segment ClarkSea Index averaged a healthy $24,119/day in 1H 2023, down 38% y-o-y but still 40% above the ten-year trend).
Strong day rates across “energy” shipping sectors including tankers, gas and offshore with softer market conditions across container and bulk carrier markets.
Moderate growth in seaborne trade as global economic weakness impacts but geo-political driven changes in trading patterns and emphasis on energy security remain supportive
Supply side constraints continue in some segments with record low orderbooks in bulkers and tankers
Impacts of decarbonisation policies evident in new regulations, alternative fuel newbuilding orders, fleet renewal requirements and speed of ships
Segment Review:
“Top marks” across shipping’s half year report are dominated by “energy” shipping. Our weighted crude & products tanker index was a robust $46,024/day, 116% above trend and only marginally below the 20 year highs of 2H 2022 with redistribution of trade flows and sanctions remaining supportive. In gas, the LPG sector has seen its strongest ever half year period (VLGC >$73,000/day, US export growth impacting) while LNG term rates (but not spot levels) remain strong (energy transition and energy security). And if you didn’t “drop out” during the prolonged downturn, the offshore oil and gas fleet is benefiting from improving utilisation (our North Sea PSV index was 73% above trend). Strong Offshore wind investment continues. Outside of energy, Car Carrier rates continue their “heroic” run for the moment but with lower liquidity: 275% above the ten year trend at $110,000/day. The dry bulk market moved 15% below the ten year trend (hopefully setting some groundwork for improve ments ne xt year). And after being the “star pupil” in last year’s report, as expected, the container market has “normalised” into a period of low freight as congestion has returned to pre-Covid levels: activity continues however, with newbuilding orders, fleet renewal needs, pockets of resilience in the charter market and all-time slow speeds.
Trade: Going The Distance
After contracting marginally in 2022 (particularly container, minor bulk), global trade has reverted to slow growth (“energy” trade still outperforming). China’s reopening has been helpful (although economic signals, and the prospects for stimulus, continue to be mixed) and while the “vulnerabilities” in the world economy we referenced at the start of the year remain we are projecting 2.3% growth to 12.2bn tonnes in 2023. The impact of geo-politics / distance remains supportive, with tonne mile trade growing at 3.9% on an annualised basis (nearly double the long term trend with an even stronger trend for tankers). With shipping hugely impacted by global events of recent years (Covid then the Ukraine war), disruption, complexity, geo-politics and energy security remain key trade themes.
Supply Side: Constraints Remain
The world fleet grew by 39m dwt / 1.7% in the first half to reach 2.3bn dwt / 1.54bn GT, slightly above trend but still continuing a theme of relatively restrained fleet supply growth. The value of the world fleet is approaching $1.4 trillion: the contract value of the orderbook is ~$350bn. Shipbuilding deliveries are increasingly focused on container and gas carriers. S&P activity remains well above trend, but demo levels have not increased as expected for the moment.
Extra Green
In our mid-year report five years ago, we advised “extra classes in green”. Complexities are building, with the introduction of EEXI / CII the latest step in shipping’s decarbonisation pathway. We estimate 44% of newbuild tonnage ordered in the first half was alternative fuelled (with methanol, 62 orders, catching up LNG, 86 orders: see our latest green tech tracker). Continued impacts on the speed of ships, fitting of Energy Saving Technologies (ESTs) and fleet renewal requirements.
A more detailed half yearly review is available on request or is downloadable from SIN for subscribers. Any views or opinions presented above are solely those of the author and do not necessarily represent those of the Clarksons group. Best holiday season wishes from Clarksons Research.
Source: Clarksons Research
