As a result Fray said a recovery in 2023 is now at risk. The demand outlook is weak, implying that a negative impact of the easing of covid-related inefficiencies more than offset the positive impact of increased inefficiencies driven by environmental regulations, Fray continued. An improvement in market balances relies on scrapping in 2023/2024.

Looking at the oil tanker market, the available fleet is growing by significantly more than actual capacity owing to reversal of floating storage, capacity growth is decelerating and will become negative over the forecast.

The tanker scrapping has ramped up in 2022, but volumes remain slow on larger tonnage, particularly VLCCs, explained Tim Smith, Director of MSI. Forecast newbuilding deliveries have been lowered due to a drop in contracting.

Although the container market remains very strong, there have been signs of weakness, said Daniel Richards, Associate Director MSI. Trade growth has slowed due to disruption to manufacturing in China caused by Covid-19 and there is pressure on consumer incomes. However, container volumes are still high, and congestion is a major issue as well.

The containership orderbook is now very large, and Daniel suggested stopping ordering containerships as the market is facing risks due to the massive orderbook.

Trade outlook is weak in 2022-2023, the industry is expected to back to “normal” by mid-2023. After mid-2023, vessel speed will become more important if the fleet slows down to meet environmental regulations, which would partly offset high vessel deliveries, Daniel added.

Another big challenge facing the newbuilding market that is the environmental timelines continues to accelerate, with an increasing focus on GHG emission regulations. The majority ships will need to comply with regulations with EEXI and CII will come into force shortly, said Jianjun Wang Regional Director, Asia for MSI.

Source: https://www.seatrade-maritime.com/dry-cargo/risks-ahead-shipping-markets