A Remarkable Year
by Richard Scott FICS, member of London & South East Branch Committee, 22 January 2022
Last year was a remarkable period in the global shipping industry. Annual statistics for 2021 now emerging, some of which may be revised significantly when more detailed information is available, emphasise the extent of the improvement in markets and freight rates.
Not all parts benefited from this strong pattern, however. The tanker market remained in the doldrums, with limited activity and depressed freight rates. By contrast, container box and ship charter rates were maintained at exceptionally high levels. In the bulk carrier and liquefied natural gas carrier markets, much support was derived from positive influences.
Driving this widespread improvement was recovering seaborne trade volumes. During the previous year a pandemic-affected downturn saw global seaborne trade (all cargoes) down by 3.4%. But signs of revival emerged in the later months of that year and in 2021 further recovery resulted in an estimated 3.6% rise, according to provisional Clarksons Research estimates, reversing the earlier weakness.
Other influences assisted the shipping markets upturn. Growth in the world fleet of merchant ships remained mostly moderate. But available cargo-carrying capacity was restricted by the declining productivity of much of the world fleet, amid logistical delays and disruption to schedules and trade patterns caused by the pandemic’s various effects. The shipping market demand/supply balance tightened as a result.
The impact of these aspects can be clearly seen in the ClarkSea Index, a weighted index of representative charter earnings in the tanker, bulk carrier, container ship, and LPG carrier markets. This index averaged $28,700 per day in 2021, a 93% increase compared with the previous year’s $14,839 daily average, and also its highest level in over a decade.