Clarksons Research have today released their latest annual review of shipping markets, including full year 2023 data points, charting the progress of market developments across another dynamic year for shipping markets. Summarising the annual review Steve Gordon, Global Head of Clarksons Research, commented:

“Although our average day rate index, the ClarkSea, fell y-o-y (driven by a now “normalised” container market), it remained 33% above the ten year trend with gas, tanker, offshore and car carrier all experiencing strong conditions and dry bulk and containers (Red Sea disruption) rallying late on. With a return to trade growth and a good flow of newbuild and S&P, it was positive year for many market segments across the shipping industry.”

• Seaborne trade up 3% to 12.4bn but with increasing complexity and impacts from geo-political disruption
• Strong freight and day rate levels across “energy” shipping including gas, tankers and offshore oil and gas
• World fleet up 3% to 2.3bn dwt, newbuilding orderbook increases only 3% y-o-y to 126m CGT
• Shipbuilding production up 10% y-o-y to 35m CGT, with China producing over 50% of output for the first time
• Significant emissions regulations introduced, investments in alternative fuels and energy saving technologies continue
• See below a further Segment Review and attached a copy of our weekly Analysis published on Shipping Intelligence Network :

Tankers: The market saw another very strong year, with average tanker earnings remaining elevated at $40,775/day (steady y-o-y, 2022: $40,766/day), with continued support from longer-haul trades following the redistribution of Russian oil flows post Ukraine conflict. VLCC earnings increased by 80% y-o-y to $43,206/day on the back of rebounding Chinese crude imports and increased Atlantic exports, while earnings in the Suezmax and Aframax sectors remained very robust, exceeding VLCC earnings for a third consecutive year. Clean MR earnings eased slightly but remained very robust at $26,948/day.

Bulkers: 2023 was a softer year (average bulkcarrier earnings fell 40% y-o-y to $12,371/day), amid reduced fleet inefficiencies (e.g. congestion) and impacts from cumulative fleet growth over recent years (offsetting firmer demand trends). The fourth quarter was seasonally stronger (earnings averaged $17,468/day). Capesize spot earnings averaged $12,429/day in 2023, similar to the weak 2022 level, while earnings in the smaller segments dropped back.

Containers: Freight and charter rates dropped back in 2023 as the market ‘normalised’ from exception 2021-22 levels, with average freight rates down 71% y-o-y and average charter rates down 68% (but remaining above pre-Covid 2019 levels). The outlook suggested that rates would “bump along at the bottom” in 2024, but with the disruption in the Red Sea (over 300 containerships of 4m TEU have now diverted via the Cape), Shanghai to Europe box freight rates have, for the moment, trebled (but are still 65% lower than the Covid-19 peak).

LPG: VLGC spot earnings were exceptionally strong, rising 69% y-o-y to an all-time high of $91,625/day, on the back of firm US-Asia LPG trade, a wide West-East arbitrage and disruption at the Panama Canal.

LNG: Rates softened y-o-y (from an all-time high 2022) but remained healthy, with spot rates for a 160k cbm DFDE vessel averaging $97,077/day, 34% above the ten-year trend. With a significant orderbook (52% of the fleet), the fleet is poised to expand strongly in coming years to help support a record volume of liquefaction capacity set to come online across 2025-27.

Offshore Oil & Gas: The offshore oil & gas markets continued to strengthen, with the Clarksons Offshore Index (tracking OSVs, rigs and subsea vessels) rising to the highest level in over 15 years; offshore wind markets had a more mixed 2023 suffering from some inflation pressures and project delay, but the underlying longer-term outlook for wind still remains positive.

Chemical Tankers: Chemical tanker market conditions generally remained strong in 2023 with swing tonnage continuing to trade in the CPP market, though some easing was seen from record levels in late 2022. The 1yr TC rate for a 19,999 dwt ship averaged a record $19,292/day across 2023

Car Carriers: Charter rates remained at all time highs, with support from record trade volumes, including surging long-haul Chinese exports (notably of EVs). Since 2019, global seaborne car trade in ceu-miles has grown by 19%, vs a 1% expansion in fleet capacity. By end 2023 the 1yr TC rate for a 6,500 ceu PCTC stood at a record $115,000/day, having remained above $100,000/day since late 2022.

Shipbuilding: Global shipyard output increased 10% y-o-y to 35m CGT (with China delivering 50% of output for the first time). There was a good flow of orders across 2023 (down 19% y-o-y in CGT but up slightly in DWT to 109m) with an increase in tanker orders (+235% by dwt, albeit from a low base). The orderbook is still overall only 12% of the fleet but is highly skewed to containerships and gas carriers in the coming years (meaning some potential constraints for tanker and bulker supply). Yard “forward cover” is a healthy ~3.6 years and our overall newbuild price index rose 10%.

Seaborne Trade: Recovery & Distance. After stalling in 2022 (and despite the sometimes gloomy economic forecasts at times last year), global seaborne trade increased by 3% to 12.4bn tonnes (we are projecting 12.6bn in 2024 but will monitor economic “vulnerabilities”). Top performing trades (by volume) in 2023 were Cars (+15%), LPG (+6%) and, supported by China’s reopening,

Dry Bulk (+4.3%) while container volumes remained weak (but bottomed out in the summer). And a 5% increase in global seaborne tonne-mile trade (a full year of redistribution of Russian oil flows supported oil / oil products tonne mile growth of 7% / 10%) represents the biggest growth since 2017: a helpful “distance kicker”. In Cruise, passenger volumes returned to pre-Covid-19 levels of 31m and some market optimism is creeping back.

World Fleet Supply: Fleet Renewal In Focus. World fleet supply grew by a moderate 3.2% to 2.3bn dwt, with the tanker fleet growing by only 1.9% but the containership fleet by 8%. The average age of the world fleet increased to 12.6 years (2013: 9.7yrs) and we estimate 31% of tonnage will report D or E ratings under CII. S&P volumes have remained at elevated levels (steady y-o-y at 129.9m dwt) with tanker and bulker prices up ~15%. With increasing prices the value of the world fleet and orderbook has reached $1.8 trillion. Scrap volumes remained low (10.7m dwt) with pricing steady ($510/ldt). Financiers reported an active year but with strong competition for “top tier” and early repayments. Capital markets were generally quiet.

Managing Disruption & Going Green. So, along with plenty of “managing disruption” (see our briefs on the Red Sea / Panama) and “going green” (EEXI, CII and now EU ETS, net zero commitment from IMO), it has been another resilient and overall healthy year for many across shipping. Happy New Year and our best wishes for 2024!
Source: Clarksons