The container shipping market has seen a bit of a flop since the onset of the global financial crisis back in 2008, however, the things have started to look a little bit better recently, according to Clarksons Research.
Containership earnings have spent most of the period since the onset of the global financial crisis back in 2008 at bottom of the cycle levels.
The first building block was that the freight market appeared to bottom out in the second half of last year, with improvements in box spot rates on a range of routes backed by careful management of active capacity. In the first quarter of 2017, the mainlane freight rate index averaged 64 points, up 42% on the 2016 average.
However, containership charter rates remained in the doldrums into 2017, with the time-charter rate index stuck at a historically low 39 points at the end of February, before the market picked up sharply during March taking the index to 47, Clarksons informed.
This change in conditions was partly supported by liner companies moving quickly to charter to meet the requirements of new alliance service structures.
"The start of some upward movement at last was to some extent in line with expectations, with demand growth expected to outpace supply expansion this year, and no doubt accelerated charterer activity helped too. However, the market received additional impetus from recent sharp shifts in supply and demand," Clarksons said.
The analysis of the monthly development of year-on-year growth in containership fleet capacity in TEU as well as the 3-month moving average of year-on-year growth in estimated seaborne container trade showed that in 2015, capacity growth reached 8%, and remained ahead of trade growth until the fourth quarter of 2016. In 2017, with capacity declining by 0.1% in the first quarter, backed by historically high demolition, and trade growth, notably in Asia, pushing along nicely, a big gap between the two factors has opened up.
Demand is projected to outgrow supply this year by 4% to 2%, but not by quite as much as seen so far. Full year expectations may be a little more restrained, but it is still a helpful switch, according to Clarksons.
"In the case of the recent changes in containership earnings, maybe a bit of extra heat from the charterers' side helped, but it looks like fast-moving fundamentals have offered some support too. Perhaps it all goes to show that old methods can sometimes be as good as new ones," Clarksons said.