US-based capital markets information company S&P Global has released its Global Shipping Report which analysed the 2024 outlook for the shipping industry and investigated some key causes of the industry’s breakdowns.

S&P Global warned there will be significant effects by 2024 as shippers will need to adjust to a significantly changed environment. This leads to short-term objectives centred on “grabbing hold of all the savings available in a depressed freight rate market”.

Of high importance was the forecast supply/demand balance for the industry, which according to S&P Global focused on three elements: identifying global container demand growth, supply growth, and the global structural factor.

Shipping analysts emphasised how this “period of pain will continue… With barely a blip of a fall peak season for cargo volumes, the stage is set for a prolonged period of pain for containerized shipping and its key stakeholders”.

The report highlighted certain progress toward post-pandemic recovery and some advances during 2022, but these numbers stagnated throughout 2023.

Alan Murphy, CEO and Founder, of Sea-Intelligence, brought attention to how hard Covid-19’s extreme volatility is still affecting the shipping industry.

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Murphy said: “Even though we are post-pandemic we are still affected by the volatility that the pandemic caused”.

“If we focus on a year-on-year perspective from a global view, from the last four months of 2022 we saw considerable contraction and a bit of recovery balancing out the rest of the year. However, we should warn that we are looking YoY and the volatility remains”.

As further noted by Sea-Intelligence, not only have prices dropped back to the point where ocean carriers were only marginally viable, but they are also now facing structural overcapacity, which may persist until 2028.

In regards to supply chain resilience, shipping experts noted how it will remain crucial in 2024, as it has for the previous three years, “with the nature of risks shifting to geopolitics and tariffs from operational challenges.

According to Fitch Ratings, an American credit rating agency, its “Global Shipping Outlook 2024” made similar predictions highlighting a “deteriorating outlook for the shipping sector”.

The credit agency noted how shipping firms’ 2024 profitability will continue to deteriorate as a result of the supply chain stresses that were relieved in 2023 and following the peak of 2021–2022, resulting in a near normalization of container freight rates and reduced profits.

Fitch further emphasised how tankers and dry bulk are expected to stay steady, with tankers likely performing the best.