Shipping trade 2021: good reason for further optimism

Image Ship

March 2021 – Global shipping can look back on 2020 as an extraordinary year. While the global economy suffered under the coronavirus crisis, shipping companies were enjoying quite brisk trade. For 2021, partly thanks to the rapid economic recovery in China, the outlook remains positive overall, as revealed in Hamburg Commercial Bank’s “Shipping Outlook 2021”, available now.

“For the global economy and the shipping industry alike, 2020 was an extremely unusual and challenging year. There was just one major difference: Shipping companies are able to look back on what was a really good year and can remain optimistic for 2021, too”, says Dr. Nicolas Blanchard, Chief Clients and Products Officer at Hamburg Commercial Bank (HCOB). At the same time, though, the authors of the industry study advise caution: “We are looking ahead with confidence, but after the experiences of 2020 we are nevertheless advising people to expect the unexpected.”

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Freight rates at a very solid level on average

Jan-Philipp Rohr, Global Head of Shipping at Hamburg Commercial Bank, bases his positive appraisal of the situation in the shipping industry on its internationally interwoven nature. “Even in times of crisis, global trade does not come to a standstill. At the same time, the recently cautious ordering strategy pursued by shipping companies has paid off – rates are not being pushed down by excess supply as has been the case in the past.” The cargo rates in the three major areas of containers, bulk and tankers, according to Jan-Philipp Rohr, remained “at a very solid level on average” in 2020. He notes that the times of oversupply of ships and thus falling cargo rates are over for the time being, since the number of new orders is also comparatively low at present.

The robust condition of the global shipping market is largely thanks to one country in particular: China. The far-eastern superpower has recovered quickly from the economic impacts of the coronavirus pandemic and is currently experiencing what has thus far been a V-shaped recovery in its domestic economy. This is partly thanks to the fact that customers from the USA and Europe are now ordering consumer goods from China online on a massive scale. On top of this, there has also been a burgeoning Asian trade between China and the other nations in the region.


Private consumption drives container shipping

The current boom in container freight rates does not mean, however, “that we can expect to see something similar in the global economy,” says HCOB’s Chief Economist Dr. Cyrus de la Rubia. The upswing in the container market is down to more specific factors, he explains, one of the main ones being the recovery effects caused by the lockdowns. “Furthermore, over the past few months, people have been willingly compensating for their lack of travel by purchasing new furniture or other durable consumer goods that are transported by sea,” says Cyrus de la Rubia.

There is cautious optimism among the shipping experts at Hamburg Commercial Bank in relation to bulk freight, too, whereby the development of the market is closely linked to the Chinese demand for iron ore and coal. For the tanker market, too, the authors are cautiously optimistic: “The charter rates for tankers will admittedly not get back to the historic highs of 2020, but this year they should benefit from the upward trend in oil prices.”

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