{"id":14897,"date":"2020-03-24T09:07:29","date_gmt":"2020-03-24T09:07:29","guid":{"rendered":"http:\/\/www.felana.com.mx\/eng\/2020-u-s-exports-outlook-for-containerized-shipping-traffic\/"},"modified":"2020-03-24T09:07:29","modified_gmt":"2020-03-24T09:07:29","slug":"2020-u-s-exports-outlook-for-containerized-shipping-traffic","status":"publish","type":"post","link":"https:\/\/www.felana.com.mx\/eng\/2020-u-s-exports-outlook-for-containerized-shipping-traffic\/","title":{"rendered":"2020 U.S. Exports Outlook for Containerized Shipping Traffic"},"content":{"rendered":"

2019 was a historic year with trade wars, a global economic shake down, and political turmoil.<\/span><\/h4>\n

Global GDP Growth compared to 2018 was 3%. And, as you see on the below chart from Statista, 3% growth is the low-point of expected Global GDP growth between 2014 to 2024.<\/p>\n

Going into 2020, economies like China\u2019s are expected to further slow down from 6% in 2019 to 5.5% in 2020, and India is going to struggle to increase their numbers from 4.5% (as of September 2019) to 5%.<\/p>\n

What does all this mean for the containerized shipping market in 2020?<\/span><\/h4>\n

Firstly, according to Drewry, global container demand is expected to increase only 1%, which means only one-third of global GDP growth will be affecting container demand. This ratio is an exceptionally-low ratio considering in past years, this multiplier was 1 to 1.5 of global GDP growth.<\/p>\n

In 2019, a significant increase of 1.2 million TEUs has added to the global fleet, while 200,000 TEUs have been scrapped. In total, 945 container ships are forecast to be ordered between 2019-2023, which is equal to 7.4 million TEUs.<\/p>\n

So, there is a serious imbalance of surplus supply against slow-growing demand. And, this is just part of the problems that carriers are facing.<\/p>\n

With the IMO 2020 rule, carriers\u2019 bunker structure has completely changed.<\/span><\/h4>\n

Every carrier took a different approach on how to manage operating costs and reflect those to their customers. As of today, carriers had been able to reflect bunker increases to their customer on some trades, while on some trades they have been struggling.<\/p>\n

We believe that the current supply\/demand imbalance signals today\u2019s \u201call in\u201d rates will fall in the coming months, other than possibly monthly peaks, based on low steaming, blank sailings, and so on.<\/p>\n

There may also be pocket of opportunities for carriers on the export market.<\/span><\/h4>\n

One of the most important would be the Phase One deal agreed between U.S. and China. China agreed to purchase $40 billion worth of agricultural products, while they only purchased $9.2 billion of those goods in 2018 and $19.5 billion in 2017. If they keep their word, this can be a good opportunity for Midwest\/West Coast exports to Asia, and help carriers reposition their equipment back to Asia.<\/p>\n

Another small impact may possibly come from some dry bulk business turning into containers, as the bulk freight rate saw a bigger hit than container freight rates for certain lanes based on the IMO 2020 rule \u2013 of course, they still also have their own oversupply.<\/p>\n

Even if all these signs may look good from a narrow view of decreasing freight rates and available space, I don\u2019t really think it benefits anyone in the mid to long-term.<\/span><\/h4>\n

The IMO 2020 rule put a huge pressure on ocean carriers \u2013 an industry struggling since 2010 \u2013 and we will feel the impact further. We may have one more merge in the industry (which means less carrier options), we may have more blank sailings, much less flexible carriers with free times\/detention\/demmurage invoices, more issues with equipment availability in certain parts of the U.S. and continuity of diminishing service levels.<\/p>\n

Another interesting year is waiting for us \u2013 get ready.<\/p>\n