Marsoft's 22Q3 Update
Things are changing fast in some of the major shipping sectors. Our quarterly reports discuss fundamentals in detail and provide projections through 2026.
The tanker market is seeing some of the biggest shifts, with VLCC rates experiencing a long-awaited surge, while rates for the other sectors come back to earth a bit. We see this pattern continuing over the next year or so, as the fallout from Russia-Ukraine war leads to shifting trading patterns, which are boosting tonne-mile demand.
In contrast, dry bulk rates have moved lower across all sectors over the past month or so. A combination of weak steel demand, due to a sluggish global economy, and a dip in port delays has likely contributed to the recent retreat, and we expect these factors to continue over the coming year. European coal imports are a wild card over the coming year, as they could increase significantly the more Russian gas supplies to Europe are cut off.
In the containership market, most publicly listed liner operators and charter-vessel companies reported new record-high profits for 22Q2, as vessel availability remained extremely tight and helped sustain rates near historical-highs. But cracks appeared in the market, and by mid-August, liner spot freight rates had lost 30% of their year-start values. And while charter rates saw only small corrections since their March-2022 record-highs, employment terms started to normalize, now encompassing shorter hire-periods and more limited forward chartering. With weakening economic conditions and softening global demand, delays and port congestion are likely to adjust lower sooner than later. In turn, this should lead to further correction in rates and asset prices.
Meanwhile, the LNG tanker market has seen improving rates over the past couple of months, after a somewhat sluggish 22H1. But the big story in this sector has been record-high ordering, with the orderbook now representing almost 50% of the fleet size. Despite healthy projections for LNG trade, significant fleet growth is expected to weigh down on fleet utilization in the latter part of our forecast. Although VLGC rates have drifted lower over the past six weeks, they should hold at relatively healthy levels through 2023. The combination of steady demand growth and a moderate orderbook should lead to a modestly stronger market over the 2024-26 period.
Dry bulk and tanker reports are available now to subscribers via Navigator, and we will release the containership and gas tanker market reports by early September. Flagship System clients will receive the market updates via hosted site or delivery via email link.