Will 2021 Be Better for Shipping?

A cargo ship being loaded or unloaded at a bustling commercial shipping dock with large red gantry cranes.

As major shipping companies prepare to release their Q3 results, there are very few alarm bells ringing that the industry is suffering any great impact from the ongoing COVID-19 pandemic.

Global container trade was up 2.7% in the July-September period, compared with the year-earlier period. The year-to-date volume is just 3% behind the equivalent period in 2019, which is following a 6.9% rise in September.

Third-quarter volume growth marks a startling turnaround for carriers. Back in April carriers were left reeling from a 13.1% slump in volumes amid the height of the initial pandemic outbreak.

Strong throughput at US ports in the past few months has shown that import demand is bouncing back faster than expected as retailers restock and there is much confidence that freight rates will remain high in the final quarter.

Tanker earnings may have weakened in recent weeks, as the sector is unlikely to benefit from increased floating storage during the second wave of the pandemic. US Gulf crude exports are also defying the odds, with European and Asian refineries still buying large volumes.

The dry bulk market has been volatile this year in comparison, but China’s massive infrastructure investment and resulting hunger for raw commodities has kept earnings at a reasonable rate.

Against this largely positive picture for 2020 are some dark clouds that could impact 2021 and beyond.

Much of the uncertainty is of course related to the global economy and how long the coronavirus pandemic will last. According to the International Monetary Fund’s latest forecast, China is the only major economy expected to record GDP growth this year.

It is projected that other markets will see a significant bounce back in 2021.

With the second wave of the virus still rampant in Europe and elsewhere and high levels of unemployment and reduced demand for goods and energy products, there is no guarantee that a vaccine will help lessen the impact of the virus on shipping.

Similarly, with Joe Biden expected to be the new US president, new approaches to combating the disease may have ramifications on consumer behavior.

Even in the best-case scenario on the global economy, there will only be a return to growth in the second half of 2021. Even then, many nations are expected to recover much more slowly.

With these potential benefits in mind, despite the positive outcomes from 2020, shipping must continue to proceed with extreme caution.

Recent Blogs